Saturday, August 27, 2011

Google Up +7% for Week! (Chart) *$500 million settlement over unlicensed pharmacy ads* GOOG


Google settled with the U.S. Justice Department over ads carried for unlicensed pharmacies
The fine was $500 million


Google Inc. GOOG closed at $526.86 on Friday, August 26, 2011 and was up +7.32% for the week, is down -12.73% for August, was up an impressive +19.22% for July, is down -11.30% for 2011, and is up +81.12% since the March 9, 2009 market cyclical low. GOOG is down -17.63% from the 2011 and multi-year closing high of $639.63 on January 18, 2011. That was the highest close since $653.82 on January 14, 2008. Google dropped below the 20-day average on August 4 and the 200-day average on August 8. GOOG dropped below the 50-day and 100-day averages on August 16.

S&P 500 By comparison, the overall market, the S&P 500, closed at 1176.80 for the week, and was up +4.74% for the week, is down -8.94% for August, was down -2.15% for July, and is down -6.43% for 2011. SPX is up +73.95% since the March 9, 2009 market cyclical low. SPX closed at a multi-year closing high of 1363.61 on Friday, April 29, 2011, the highest close since the June 9, 2008 close of 1404.05, and is now -13.70% below that peak. GOOG is outperforming the overall market long-term since the March 9, 2009 market bottom, underperformed the market in 2010, and is now underperforming the market in 2011, though both are negative for the year. A review of the S&P 500 is here, S&P 500 Rallies for First Time in Five Weeks! (Chart) *Up +5% for week, down -9% for month*.

Google Fundamentals Google reported strong calendar Q2 2011 financial results on July 14 and are reviewed here, Google Reports Strong Q2 Financial Results (Charts) *Record revenues, net income and EPS increase*. Current Google financial data, charts, and review is at the Google Financial Performance page, updated for the latest calendar Q2 2011 financial results, reported on July 14, 2011. A review and analysis of the Q2 2011 earnings call is at the Google Earnings Conference Call page. Our updated valuation and target price for GOOG stock is posted at the Google Stock Valuation page. Revenues from outside of the United States were 53.97% of total revenues for Q2 2011, up from 53.29% QoQ and from 51.79% YoY.

Google News A summary of recent news & announcements are below in this post; others are posted on this blog.

Economic and Market News Information about the USA and world economies is posted at Boom Doom EconomyFinancial ControlsBaidu Planet, and Neo Solomon. Additional current commentary on both the overall stock market and economy is posted at Matrix Markets.


Google Daily Chart Below is the GOOG daily chart since April 14, 2011 to illustrate some price interactions and an intermediate-term perspective.

Noteworthy Closing Prices
Current Close: $526.86
2011 and Multi-Year High: January 18 $639.63
2011 Low: June 24 $474.88
2010 High: November 8 $626.77
2010 Low: July 6 $436.07
YE December 31, 2010: $593.97
YE December 31, 2009: $619.98
Cyclical Low November 24, 2008: $257.44

Google Chart Review
Intermediate Term Trend plunging 25d avg greater than ascending 50d avg since 7-21-11, GOOG is below both, tenuously bullish
Long Term Trend GOOG less than 10 month ema = 551.50, bearish
Key Resistance at resistance, 100d avg 540, 50d avg 546, benchmark 582, benchmark 600
Key Support 520-518, 6-24-11 closing low 475
Moving Averages below all major avgs: 20d, 50d, 100d, 200d
Uptrend Line below since 8-15-11; line from 11-24-08 cyclical closing low 257.44 up thru 7-6-10 closing low 436.07
Downtrend Line below since 1-18-11; tested 7-25 & 26-11; line from 11-6-07 closing high 741.79 down thru 1-18-11 closing high 639.63
RSI 14 Day = 44.73 is reasonable, ascending
RSI 28 Day = 38.42 is oversold, level
MACD (12,26,9) = -3.81, ascending, multi-year low on 8-19-11 (-11.55), multi-year high on 7-19-11 (+10.07)
Volume low 3.6M latest day, 50 day avg = 4.25M
Price Earnings Ratio (ttm) higher 19.00, approximate historical average of 21-22+


Conclusion Despite the news of the $500 million settlement with the U.S. Justice Department over carrying ads of unlicensed pharmacies, the Motorola acquisition, the S&P downgrade of GOOG stock to sell, and lowered tech company outlooks, Google's stock price is more about the typical mid-quarter doldrums and the USA equity market equilibrium. GOOG has lost all the gains from the strong Q2 2011 earnings report. Analysts raised their estimates and/or price targets for GOOG as a result. Google Co-Founder and CEO Larry Page redeemed himself after his initial disappointing Q1 2011 financial results as CEO, which created uncertainty over the management restructure. CEO Page is now advancing aggressively with the acquisition of Motorola Mobility. The Q2 2011 financial results are reviewed on the on the Google Financial Performance page. The Q1 2011 earnings call is reviewed on the Google Earnings Conference Call page and will be updated soon for the Q2 2011 earnings call. We reiterate our forecast that Google should have better financial performance ahead in 2011. The intermediate-term trend continues tenuously bullish. The long-term trend continues bearishMore about the value of GOOG stock on the Google Stock Valuation page.

Disclosure We have no position in GOOG. We continue bullish on GOOG for 2011 and even beyond.

Google News A summary of recent news & announcements; others are posted on this blog.
● Google announced a $500 million settlement with the U.S. Justice Department for carrying ads of unlicensed pharmacies on August 24, 2011.
● Asia: China's Commerce Ministry says Google has not applied for approval of the Motorola Mobility acquisition. Google is opening a Bangkok, Thailand office to enter the Southeast Asia market, with a population of 120 million people. Google already has offices in Kuala Lumpur, Singapore, and South Korea.
● Google announced the acquisition of Motorola Mobility on August 15, 2011.
● Google search had a 65.1% USA market share in July 2011, down from 65.5% in June 2011.
● Google Android had a 48% global market share in Q2 2011 of smartphone shipments per Canalys.
● Google in August 2011 added support for its Google Voice-based Gmail calling service in 38 languages all over the world. Users may also now buy calling credit in Canadian dollars, British pounds or Euros.
● Google TV sales via Logitech have been disastrous through June 2011, returns have exceeded sales. The price has been slashed from $249 to $99.
● The U.S. Senate Judiciary Committee's antitrust subcommittee has scheduled a September 21, 2011 hearing: "The Power of Google: Serving Consumers or Threatening Competitors?".
● Google CFO Patrick Pichette said at the Fortune Brainstorm Tech conference in July that Google Co-Founder and CEO Larry Page is "refocusing" Google back to its original "start-up philosophy" and specifically on products.
● Google CFO Patrick Pichette said at the Fortune Brainstorm Tech conference in July that 550,000 Android devices are being activated daily and the Google Chrome web browser has 160 million users. Previously, Andrew Rubin tweeted on June 28 that 500,000 Android devices were being activated daily at a growth rate of +4.4% weekly. At the Google Chrome Event in December 2010, Google said the Chrome web browser had 120+ million users.
● Google announced June 24 the Federal Trade Commission had launched a "review of our business". This is believed to be an antitrust investigation into Google search. The European Commission began an investigation of Google for "abusing its dominance" in 2010 that is still in process.
● Google Voice Search was announced June 14.
● Google unveiled Chromebook in May and both the Acer and Samsung versions went on sale in June.
● comScore announced May 6 that Google Android was the top USA smartphone platform with a 34.7% market share for the quarter ending March 2011.
● Google announced One Pass on February 16 to counter the Apple announcement the previous day of an App Store subscription service. It does appear that Google is offering more favorable terms to publishers than Apple.


Google Data Google's market capitalization dropped to 10th largest in the USA at $170.12 billion. This is behind #1 Apple $355.61 billion, #3 Microsoft $211.55 billion, and #4 International Business Machines $202.00 billion (IBM initially passed $200B the week ended April 1, 2011). Google is the 4th largest technology company in the USA by market capitalization behind Apple, Microsoft, and IBM. Current Google financial data is at the Google Financial Performance page. A review and analysis of the Q2 2011 earnings call is at the Google Earnings Conference Call page. More about the value of GOOG stock on the Google Stock Valuation page. Headcount: On a worldwide basis, Google employed 28,768 full-time employees as of June 30, 2011, up from 26,316 full-time employees as of March 31, 2011. Google is compared to other giant technology companies here [Largest USA Tech Companies: Financial Performance & Position Review].

GOOG! Google describes itself in press releases as, "Google's innovative search technologies connect millions of people around the world with information every day. Founded in 1998 by Stanford Ph.D. students Larry Page and Sergey Brin, Google today is a top web property in all major global markets. Google's targeted advertising program provides businesses of all sizes with measurable results, while enhancing the overall web experience for users. Google is headquartered in Silicon Valley with offices throughout the Americas, Europe and Asia."

Google's Mission Statement "Google's mission is to organize the world's information and make it universally accessible and useful. The first step toward fulfilling that mission came when our founders, Larry Page and Sergey Brin, working out of a Stanford University dorm room, developed a new approach to online search that quickly spread to information seekers around the globe. Google is now widely recognized as the world's largest search engine -- a free service whose utility and ease of use have made it one of the world's best-known brands almost entirely through word of mouth from satisfied users."

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