18 Oct 2008

Yo Henry!


Well, Henry Blodget is persistent!!

After:
a) proving to us all why he does NOT work as an analyst anymore...

"In 2003, he was charged with securities fraud by the SEC and instead of fighting the allegations against him, decided to pay millions of dollars without admitting or denying the allegations. As part of the settlement, he was banned from the securities industry."

b) ridiculing himself for screaming all month long how Google was gonna miss its earnings...
c) obviously loosing his socks on "a rather nice trade"..


... the guy is now trying to convince his readers that Googles earnings just confirmed all his pathetic rantings about the company & its stock...

In a post titled "Google Stock Future: Dead Money", he really tries hard to come up with the following problems for Google:
  • Decelerating revenue
  • Maturing product cycle (search isn't new anymore, and Google has 70%+ global share)
  • No new products ready to pick up growth slack
  • Deteriorating economy

A three year old could put his "arguments" to shame, however Henry got ridiculed by his own readers!!!

Here's three examples:


pumper said:

very disagreed (especially on the dead money argument)

what's to be afraid? at this point, goog will never ever go down below 300, not with the rate at which they rack in cash. so the downside is completely protected.

& look at the positive side for potential mega upside:
1. recessionary environment is bad for grownup businesses but is
even worse for startups, which can potentially delay google killer for another couple years due to this. (and make no mistake, search business requires massive amount of IT spendings which makes it even harder to enter)
2. maturing product cycle (or the business model itself) only means even higher FCF margin from here.
3. goog apps racks in almost 500M last 3Qs and it's obviously ready to eat msft's lunch (potential market ~10B). isn't this trend very obvious to everyone already?
4. android will bring in new type of targeted ad gradually accepted by most users. chrome will be new internet platform a few years from now (rest assure this one is strategically important, not just another goog fad that Eric will let go).

so the bottom line: we see a clear bottom at $300ish but numerous potentials for huge upside for years to come... so which way are you placing your bet & what other stocks at current environment can give you even more assurance?

and finally, one big problem w/ "No new products ready to pick up growth slack" argument. we are not talking about aapl/msft/hpq here... internet search is itself a trend (& necessity) not a choice. so in fact, as long as goog keeps staying on top of their own game, they will just grow & racking in piles of cashes for a very very long time --- no newer & flasher products needed to drive growth, which is like what aapl has been struggling to do lately.


Jim Cramer 2.0 said:


Now correct me if i'm wrong. Does dead money mean you money won't grow?
If so, why say that in the title and then at the end say it's a good long term buy.
What's up with that shit bro?
Or am I wrong?


David said:
Strongly disagree.

This is not an analysis of GOOG's results but a totally biased opinion (to which, of course you're entitled) that could be applied to virtually any stock, in any circumstances.


jonathan franklin said:

Totally wrong.
Google is an advertising company that gives away so many free products that few people notice that in 5 years it will be among the world´s biggest advertising company.
"No New Products" says Henry B. That´s only because we cant´s
see the future. Besides Google has the cash to buy up great new ideas, i.e. YouTube.
So if they cant create new products, they buy them, remember Google Earth.....who else on earth coudl buy KeyHole sat photos and then give away the service first then build up a secondary biz on apps for Google Earth.


Thanx guys...


Yo Henry, why don't you quit trying to convince us you are an analysts, and try solving:



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