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April 04, 2007
6 Reasons To Sell Your GOOG Shares
Analyst Trip Chowdry of Global Equities Research must have chugged several cups of high octane coffee when he penned his downgrade of Google (GOOG) to Neutral from Buy, and set a price target of $425. He writes like an analyst who is made as hell and can't take Google any more.
1) YouTube users numbers are hyper-inflated. "Google will need to come clean on the exact number of unique individuals on YouTube.”
2) Pre-roll ads on YouTube are not working. Neither are sponsorships and banner ads.
3) Former Google board member, YouTube investor, and Sequoia Capital leading man Michael Moritz may be asked to return $1.6B to Google. Chowdry piles on saying that copyright litigation with YouTube is expected to exceed $1.6B. “We think Mike Moritz…probably had a conflict of interest and may have suckered Google into believing hype regarding the acquisition of YouTube.
tech:stocker's take on YouTube concerns: who cares? YouTube revenues are not material to Google's financial performance and share price. Its an interesting conspiracy theory that Moritz was forced from the Google board because he over-played his hand with the YouTube acquisition, but Google Video, its home-grown product, has the same issues so it can be hard to justify assigning blame for Google's legal issues on Moritz.
Reading Chowdry between the lines, we think he would counter that YouTube numbers might not be material, but the drama of YouTube is a distraction for top management and is spoiling relationships with potential partners. Fair enough.
4) 75% of Microsoft Vista users are using Vista desktop search, and 20% are using Vista Web Search.
tech:stocker's take: Every month Comscore reports that Google continues to take market share from competitors.
5) Both Microsoft and Yahoo ad networks offer lower CPC and better conversion rates than Google.
The a:c's take: We take this argument more seriously than any other on this list. A lot of dumb money goes to Adsense just because its Google and that is bound to be corrected.
6) Google is losing the technology lead in search to pre-launch start-up PowerSet and Google could lose talent to Powerset.
tech:stocker's take: Hmm...pre-launch Powerset over-powering Google? Until we can demo Powerset we'll reserve judgement. Powerset does have about 30 job openings on its site but shouldn't scare Google's HR department.
Posted by Paul at April 4, 2007 07:03 AM
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