More Videos
- 3D's Tipping Point and Your Living Room
- Silicon Valley and Hollywood Now Fast Friends
- HP Comes in As Expected; Is It Time to Buy?
- Apple Comes to AT&T's Rescue
- My Top 10 Tech Toys for the Holidays
- iPhone a Better Gaming Platform Than Android?
- Dell Has Some Explaining to Do
- Dell May Start to Show Some Promise
- Has Twitter's Finest Hours (Seconds) Come and Gone?
- Intel's Andy Bryant Offers An Explanation
MOST SHARED
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
- CNBC Anchor Takes a Sabbatical
- Amended Berkshire Hathaway Filing Indicates No Secret Stock Stakes at End of Q3
- Privately Held Facebook Creates Dual-Class Stock
- GM's Agreement to Sell Saab To Swedish Firm Falls Apart
- NBA D-League On The Rise
- On Twitter, Beware False Prophets
- 10 Holiday Cocktail Recipes from Top Mixologists
- Just In Time for Holidays: More Gloom and Doom on Economy
- Buyers Look For Bargains At Luxury Condo Auction
- Citi Mortgage Reveals What Treasury Won't
- S&P to Hit 1,200 by Year-End: Chief Investor
- Amended Berkshire Hathaway Filing Indicates No Secret Stock Stakes at End of Q3
- Facebook's Biggest-Ever Holiday Shopping Season
- Facebook's New Dual Class Structure - Slow Steps to an IPO
- 5 Big Bank Stocks Investors Should Consider: Strategists
- Gambling Drunk, Texting to Live And America's On Sale - Your Emails
- Nov. 24: Unusual Volume Leaders
- NBA D-League On The Rise
- US Firms Hit by Payroll Taxes at Exactly the Wrong Time
- Citi Mortgage Reveals Something the US Treasury Won't
- Fed Sanguine About US Recovery, Worried on Jobs
- Amended Berkshire Filing Reveals No 'Secret' Holdings
- In Time for Holidays: More Gloom and Doom on Economy
- Turkey Day 101: How Well Do You Know Your Bird?
- Privately Held Facebook Creates Dual-Class Stock
- Holiday Guide to This Season's Smartphones
- Six Ways to Boost Your Income in a Big Way
RSS FEED
Tech Check
Text Size 
 |
Have you seen Google's [GOOG
Loading...
()
]stock price today? Teetering right at $300 a share, setting a new 3-year low, trading at a level not seen since October of 2005. And for all the crud that Yahoo [YHOO
Loading...
()
]shareholders have had to deal with this past year, their shares are still trading at a pricey 24 times next year's earnings. Google is cheap! It's trading at about 13 times next year's earnings and growing exponentially faster than Yahoo, even though its growth is slowing down.
This is getting ugly with a capital "U." As in "underwater." Think about it: Google's been hiring better than 1,000 workers a quarter since that October 2005 low, hiring the vast majority of its new employees between January 2007 and the beginning of this year. Shares hit $500, $600, even $700 toward the end of last year. Now, headed under $300, that loud gurgling you hear are thousands of Google workers and their portfolios trying to crack the water's surface once again.
And now Wall Street is piling on. Just this morning Goldman Sachs cut its fourth quarter revenue outlook for Google, which turbo-charged the company's recent descent. Today's downgrade follows Barclays move on Monday, taking Google's target down to $490 from $542. Goldman also lowered its 52-week target on Google to $475 from $520. The brokerage is now looking for Google's revenue growth to hit only 1 percent, compared to the 4 percent the company enjoyed sequentially.
Couple all of this with the apparent surprise by Google CEO Eric Schmidt that the economy is fairing far worse than he anticipated. He told my colleague Jim Cramer last Friday that, "The situation economically is a pretty big concern, you've got retail spending down, you've got increases in jobless and there is a sense that we need to act." He added that he's sensing a new urgency for the new Obama administration to act. Those comments did nothing to reassure investors that Google could somehow skirt the economic crisis that seems to be affecting everyone else. He told the New York Times that Google is also slowing its hiring and reviewing expenses to cut costs.
But is this the time for investors to run for the exits when it comes to Google? Hardly. Especially when its nearest competitor's P/E is almost double that of Google. It makes no sense whatsoever that Yahoo should still be trading at a premium. A deal with Microsoft [MSFT
Loading...
()
]is virtually off the table entirely (never say never); it can't seem to get a deal together with Time Warner's [TWX
Loading...
()
]AOL. But few analysts, experts and even many Yahoo insiders I talk to hold very little hope that a partnership like that would yield any meaningful upside; its ad-sharing partnership with Google has evaporated because of anti-trust concerns; and its own growth prospects are scoffed at by analysts crunching the same numbers, but arriving at very different conclusions.
And yet Yahoo trades so much more expensively. Is it simply because investors are still hoping for a buy-out or a deal for Yahoo's Search business? There might be a short-term pop to be had, somewhere down the road, maybe. Weigh that against a company like Google that will indeed feel the affects of the recession, and suffer along with the rest of the economy. But when it comes time to staging a financial comeback, there might be no company better positioned than Google to take advantage of it. You might disagree with that, but take a look at the new price targets from Wall Street. Yes, they're coming down, but they're still hovering around $500. Hardly an insignificant increase from the $300 range of today's share price.
Google might be out of favor today. But this company's ability to recover is the stuff of legend. And if it sneaks up on you, you'll be too late to take advantage of it. Not a question of "if," but "when." In the meantime, if you know someone at Google, head to Starbucks and buy them a treat. They could use the smile and Starbucks can use the business.
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes