Archive for the ‘Google, Inc. GOOG’ Category

A Cloudy Forecast

Wednesday, April 18th, 2012

This year it is estimated that fully 80% of new commercial computer enterprise applications will have a cloud-based offering. Whether this turns out to be true, when it comes to the future of information processing, virtually every forecast sees clouds on the horizon in leading roles. It’s a market seen as too disruptive to ignore, expected to top $200 billion in revenues before 2020. It threatens the status quo, much as did the rise of the Internet itself. (Microsoft was late in embracing the Internet. Don’t look for it to be as slow when it comes to clouds.)

The question now seems only to be the form that the revolution will take, whether it will evolve into “Platform as a Service,” “Software as a Service,” or remain more broad-based as Enterprise Content Management markets, all which fall under the general industry of cloud computing. Additionally, security issues have to be resolved to the point that businesses will feel comfortable storing customer-sensitive data in clouds.

Cloud computing is simply a way to deliver software and applications over the Internet and manage data stored remotely. For the customers of cloud providers, it eliminates the need for your PC to be connected to a server. The information accessed by users is found in the “cloud,” data and software stored in remote servers. Space on these servers is usually leased from the cloud provider. Software can be modified company-wide much more quickly, lowering upgrade costs and downtime. It also permits employees to work remotely from any place they can establish an Internet connection. Furthermore, the expense of maintaining the cloud is passed on to the cloud provider.

The key revenue drivers in this industry are licensing revenue (income from leasing software and applications to end-users), leasing revenue (income from leasing data-storage space), consulting revenue, and sales income from the sale of specific software and applications to the end users. Any company that uses computers could potentially benefit from cloud computing. The distribution channel is the same for all providers: the Internet. Companies in this sector can literally compete on a global basis because all the customer needs is a reliable Internet connection.

Consolidation is anticipated among providers, so underlying it all, of course, is the question of who will gobble up whom. IBM (NYSE: IBM), SAP (NYSE: SAP), and Oracle (NASDAQ: ORCL) have all sought to acquire cloud and SaaS technology companies, a quick way to establish a cloud presence. In the meantime, Amazon (NASDAQ: AMZN), Google (NASDAQ: GOOG), and Apple (NASDAQ: AAPL) have already planted their flags.

• Amazon Web Services offers a cloud computing platform through a collection of web services for remote computing, such as EC2 and S3, designed primarily to help developers. EC2, for example, offers developers Amazon’s strong computing environment, essentially renting virtual computers, allowing developers to build failure-resistant applications.

• Apple’s iCloud allows users to store music, photos, and documents, which can then be seamlessly grabbed by any user devices, meaning total 24/7 wireless access. The result is the company’s latest step toward a fully cloud-based central processing station and warehouse for all things Apple.

• Google Cloud Connect brings a cloud to MS Office (or brings Office to a cloud). It lets users share, backup, and edit MS Word, PowerPoint, and Excel documents over a cloud, with a system that coordinates activities in order to avoid confusion. Documents can even be edited offline, and synchronized later when online.

A brief sampling of the investment opportunities in cloud computing can be found by looking at the following 3 companies, one new-comer, and 2 old-hands:

• GlobalWise Investments (OTCBB: GWIV), via its wholly-owned subsidiary, Intellinetics, is an example of a company that offers investors a chance to experience significant growth. GWIV has developed a platform that defines a new industry benchmark and game-changing approach by combining advanced virtualization and automated content management with an open and service-oriented architecture using web services. Trading at $1.55 a share, the company has a market cap of $50.51M. Because GlobalWise only recently became a publicly traded company, available historical financial data is limited. However, revenues increased 26.7% YOY for 2010 to 2011. Gross profit increased 26% in the same period. The company has multiple growth initiatives in place to accelerate the pace of future expansion.

• Broadvision (NASDAQ: BVSN) offers a cloud-based “network of networks” enterprise social platform, for the virtual, mobile, social enterprise. Basically, it’s designed to help businesses connect with employees, customers, and partners, and it’s fully cloud-based. Trading at $25.29 a share, the company has a market cap of $116.11M. Although recently falling on hard times — last year, revenues declined by approximately 19.8% compared to the numbers reported for 2010 — the company is well established in the industry and could be poised for a turnaround.

• More risk-adverse investors wanting a piece of the cloud action should look at Salesforce.com (NYSE: CRM). Salesforce.com, an enterprise cloud computing company, provides a social enterprise cloud platform and apps to help employees collaborate easily and connect with customers. Trading at $154.67 a share, the company has a market cap of $21.11B. Revenues for 2011 were 37.1% greater than the value reported for the prior year. According to MSN Money, over the last five years revenues have grown by an average of 35.45% per year.

As with any industry, cloud computing does have risks. Successful implementation of cloud technology is complex, and very easy to get wrong. There are constantly changing security-related and cost-related questions, issues which may not be fully appreciated at first consideration. Moreover, in spite of what is sometimes promised, cloud-based applications can be difficult to manage and to grow if not planned correctly. Although in-house processing and storage carries risks, working in a shared cloud environment means accepting and dealing with different degrees and types of processing and data risks to which some users may not easily adjust. In addition, individual user needs are dynamic, fluctuating as products change, and cloud options and pricing are changing at the same time, making it a singularly difficult world to predict.

Nevertheless, the move to the cloud by companies big and small is only accelerating, with new product and service offerings appearing daily, reminiscent of the 1990s when people first started hearing names like eBay (NASDAQ: EBAY) and Amazon. Some companies offer limited applications, some offer comprehensive platforms, but all can benefit customers by providing reduced software and hardware costs, simpler IT infrastructure, and increased efficiencies: all which can directly boost net income.

Investors wanting growth or diversification should take a close look at the clouds. In so doing, they will get a forecast of the future of large-scale computing and the companies that will provide out-sourced IT services, an area that shows potential signs of significant growth.

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China Facing Google (GOOG) Rebellion

Friday, January 15th, 2010

Economic globalization and instant worldwide communication through the Internet have resulted in cultural, economic, and political clashes that could promote human rights and democracy in ways never before possible.

The most recent example is the standoff between the centralized government of China and Google over the government’s censorship of search results. China requires all Internet traffic to pass through government gateways, which then filter out anything the government considers subversive. Sites which are blocked by the filters do not show up on searches at Google’s China-based website.

Google has reluctantly gone along with the rules, given that China represents the Internet’s biggest single market, but that may all change due to what many believe are government initiated hacking attacks on email accounts of various Chinese human rights activists. The attacks, which also targeted a number of publicly traded companies, were apparently a bridge too far for Google, which now says it will stop censoring search results, and seems prepared to shut down operations in China if the dispute isn’t resolved.

The attacks, investigated by security experts, were traced to hackers in China, with sources indicating a significant probability that they were initiated by the Chinese government. The Chinese government, for its part, is doing its best to downplay the dispute, simply stating that foreign companies are expected to respect local regulations and customs. In China’s centralized political environment, the government maintains the right to control the flow of all information. Meanwhile, White House spokesman Nick Shapiro stated, “The United States has frequently made clear to the Chinese our views on the importance of unrestricted Internet use, as well as cyber security.”

Regardless of the Google-China outcome, the situation clearly represents what is becoming a major factor in world development, given the global nature of business and the ability of anyone to communicate with anyone else. Centralized governments will find it increasingly difficult to maintain the type of controls that allow them to survive. Economic and technological pressures are forcing social adjustments that were previously only the result of wars. In other words, business, trade, and technology could empower the move to democracy in ways that armies never could.

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Google’s Android Takes a Bite Out of Apple

Friday, November 6th, 2009

Even during the worldwide recession it seems consumers continue to abandon ‘dumb’ phones when, for just a little bit more money, they can get a pocket-sized computer – a smartphone – instead. According to research firm Gartner, overall handset sales are expected to shrink by 4 percent this year compared to last year. Meanwhile, smartphone sales are forecast to grow by more than 20 percent.

Smartphones account for only 14 percent of the mobile phone market today, but this segment has doubled its share of the global mobile phone business over the past three years. More than 500 million smartphones are expected to be sold in 2012 when they are forecasted to make up half the market. Revenues from smartphones are expected to double to half the industry total by 2014.

With the smartphone market being really the only game in town, the intensity of the battle for the smartphone market is turning white hot. Over the next few months an array of new models from a variety of phone makers, including some new entrants, is due to hit the market. This will have major implications for investors involved with the companies who manufacture smartphones.

The new entrants into the smartphone market aim to bridge the pricing gap between smartphones and standard feature phones and bring the more powerful product to the mass marketplace. According to Gartner, the proliferation of cheaper smartphones will further accelerate the growth rate of smartphones to 43 percent next year as smartphone sales rise to 250 million units from 175 million units this year.

It may be Apple and its juicy profit margins which will be under siege from Google and its Android operating system for smartphones. The Apple iPhone, which has been setting the bar in touch-screen smartphones, could soon be overtaken by an army of Google-powered handsets. Android-based phones – handsets that use the open source Google mobile operating system – are on the march as non-iPhone carriers look for a rival to Apple’s device. Since its introduction a year ago on one device with one carrier, Android has come a long way. Android is now currently used on 12 different handsets with 32 carriers in 26 countries.

Research group Gartner sees Android eating into Nokia’s leading market share and being featured on 18 percent of smart phones by 2012, up from 1.6 percent in the first quarter of 2009. That figure would put Android ahead of both Research in Motion and Apple operating systems, which are featured on 13.9 percent and 13.6 percent of handsets respectively.

According to Gartner analyst Ken Dulaney, Google’s Android will inevitably beat Apple’s iPhone… if only because it will be featured on many more handset models. Investors should bear in mind that Apple has only one model – the iPhone – and does NOT license its operating system or technology. Many Android handset makers are improving on the iPhone’s hardware, while a new version of the operating system and more than 10,000 applications developed for Android are providing them with very competitive software.

The companies involved in this battle for the smartphone market include: Google (NASDAQ: GOOG), Apple (NASDAQ: AAPL), Research in Motion (NASDAQ: RIMM), Nokia ADR (NYSE: NOK), Verizon (NYSE: VZ), AT&T (NYSE: T), Sprint Nextel (NYSE: S) and Deutsche Telekom ADR (NYSE: DT) – T-Mobile.

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The Apple-Google Rivalry in China

Friday, August 21st, 2009

Forget Microsoft-Apple or Microsoft-Google. A new rivalry is developing in the tech world. Google and Apple are increasingly squaring off over lucrative markets like the mobile computing field.

The rivalry between the two companies is occurring on a worldwide battlefield. And now this budding Apple-Google rivalry has spread to perhaps the most important mobile phone market in the world – China. China is the world’s largest mobile phone market with 700 million subscribers.

However, China has only recently launched third generation services, which offer broadband-speed data connections. Smart phone penetration in China is running at 10 percent of all handsets sold. But the smart phones are expected to generate higher revenues as subscribers access features such as music, multimedia and games downloads.

China Mobile will fire the opening shot in the battle for high-value subscribers over the next couple of months with the launch of the 3G OPhone, which runs on Google’s Android operating system. China Mobile had held discussions with Apple about potential iPhone distribution, but these discussions broke down as the two firms could not agree on how to share the revenues. China Mobile will make a very aggressive push to sell the OPhone. China Mobile plans to subsidize these high-end handsets for customers with up to 50 percent off the retail price.

The launch of the OPhone by China Mobile comes as China Unicom is nearing an exclusive agreement with Apple to sell the iPhone in China for three years. The company is expected to offer the iPhone when it launches its country-wide 3G services this autumn. China Unicom is hoping to use the iPhone as a powerful tool to lure some of the lucrative young mobile users from China Mobile.

The potential smart phone subscribers will most likely be young professionals, relatively wealthy, well-educated, and English speaking. In China, this can only mean Chuppies. Chuppies are China’s young well-off generation. They have money in their pocket, are brand conscious and are savvy about technology. The impending launch of competing subsidized smart phones means that the battle for these Chuppies has started.

In summary, the four companies that are the main combatants for the smart phone market in China are: Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), China Mobile (NYSE: CHL) & China Unicom (NYSE: CHU).

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Beacon Equity Research Featured Company: Google, Inc. (GOOG)

Friday, August 7th, 2009

Google, Inc. is a profitable, public company focused on search services. The company’s mission is to organize the world’s information and make it universally accessible and useful.

With one of the most well-known and valuable brands in the world, Google is able to generate revenue by providing advertisers with the opportunity to deliver measurable, cost-effective online advertising. Because advertisements are placed on a page relevant to a user’s search query, users are able to see advertisements that are useful to them.

Google’s utility and ease of use is demonstrated with the Google Toolbar, which enables access to Google search from anywhere on the web. Google also meets the needs of its on-the-go customers by being easily accessible from a number of wireless platforms including WAP and i-mode phones.

Google’s success and popularity has partially been the result of word of mouth from satisfied users, and has earned the coveted reputation as the world’s best search engine. With superior search technology and a high volume of traffic at its Google.com site, Google’s managers identified two initial opportunities for generating revenue: search services and advertising.

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A List of Bargains to Put on Radar

Monday, October 13th, 2008

The recent turbulent market conditions have robbed investors of their confidence, subsequently creating bargain opportunities that were thought of as impossible just six months ago. While no one knows the future of the markets or what will happen next, various valuations that have been used successfully for decades are screaming for investors’ attention towards certain stocks.

The first stock we would like to mention is Apple, Inc. (AAPL). This company has captured the attention of the media, Wall Street, and the general public the past few years with their innovative ideas and nearly explosive growth. The company was trading at over $190 a share just 5 months ago, but recently hit a low of $85.00. Apple is certainly one to keep an eye on as their management has clearly demonstrated they are capable of successfully creating new markets as well as increasing market share in established industries by outperforming competitors.

Another stock you will want to keep on watch while it is trading at reduced prices is Best Buy Co, Inc. (BBY). This stock has fallen from $48.25 to just $23.58 in less than a month. Analyst Bradley B. Thomas acknowledges the opportunity this has created for potential investors and recently upgraded the stock from “Hold” to “Buy.” The company is well positioned to benefit from the possible bankruptcy of Circuit City. Thomas believes Best Buy’s EPS could rise by 37 cents in 2010 if Circuit City had to close 300 stores.

We are also putting the well known Google, Inc. (GOOG) on this list as it has fallen from $602.45 to $310.30. This company’s performance holds the envy of executives and engineers around the globe. Their progressive ideas, meticulous accountability and careful attention to detail have made the company one of greatest success stories in the past decade. 20 analysts support the stock with 15 naming the stock a “Strong Buy”, 3 calling it a “Moderate Buy”, and 2 recommending to “Hold.”

One final company to bring to your attention is Uranium Energy Corp. (UEC). The junior resource company controls one of the largest historical uranium exploration and development databases in the US and has used these databases to acquire advanced uranium mining properties throughout the southwestern US. With the public increasingly realizing that nuclear power plants generate electricity with far less greenhouse emission than fossil fuels, Uranium Energy Corp. is in a favorable position for funding and exploring all aspects of uranium development.

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Google Inc. (GOOG) Slaps Analyst Expectations with Solid Revenue Figures

Wednesday, April 23rd, 2008

Many people are still smarting over the dotcom bust in 2007. They saw companies grow like flowers in the noonday sun and reaped financial rewards like never before. Then, they got burned and lost it all (metaphorically and literally) when companies couldn’t support their weight. Now, they see a company that has shot up like before, and they’re not about to let it burn them again. Those that play with bubbles, like the .com one, usually go out like bubbles. Those that nurture the flower see it grow and spread over time.

Google Inc., a website indexing and advertising host, works to offer web-based ads and various applications to the Internet user at large. From a general perspective, Google offers Internet users easy access to the Internet. The company generates income from its own websites, advertising revenue from second level advertisers on a contract basis, and pay per click revenue generated from advertisers.

The company recently reported its first quarter sales, surpassing expectations and surprising analysts by posting a 42% gain in revenue over the previous year, while first quarter 2008 revenue grew 7 percent over the fourth quarter of 2007. Positively speaking, the company’s revenue was generated over a broad base with no one revenue generator outperforming another by significant amounts. The recent acquisition of DoubleClick Inc. was included in these figures but – according to the company – had a negligible effect.

The way the market reacts to this company’s every move, one might think that Google has been operating for decades. A reminder, every once and a while, might be advisable: Google Inc. is a fairly young company, and is still working to find its sustainable growth legs. Granted, the company will probably be around for a long time to come, but it is still a relative newcomer that needs to grow in a controlled way.

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Google, Inc. (GOOG) Expected to Release “Google Phone” to Compete with Leading Cell Phone Manufactures

Wednesday, September 19th, 2007

The Google Phone has been speculated to launch for months but is now closer than ever to being released to the public. According to DigiTimes, Google will definitely launch its own-branded handset, although the company still has to finalize the handset’s specifications, operating system, production contractor and operating partners.

Many rumors have stated that Google will most likely use Texas Instruments’ EDGE solution; however the latest information has indicated that Google is also considering the possibility of launching a 3G handset that would make the phone available to more carriers.

The new handset could reach markets within the next year offering consumers free subscriptions by combining advertisements with its search engine, e-mail and Web browser software applications. At this point, Google has declined to comment, but has stated that it is working with partners to migrate its software applications from the traditional internet to mobile devices.

Google’s success will be determined by the way consumers react to idea of having intrusive advertising instead of the fees usually expected from mobile carriers.

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