Yesterday we watched as Google Stock hit a new 52 week low of $413.04. It was just on February 8th when they closed below $500 and now they’re coming way too close to that below $400 mark. Luckily for Google, the European Union just approved the buyout of DoubleClick (the U.S. already gave their stamp of approval) and Google stock was headed back up this morning on that news. We looked at some of Google’s competitors and it looks like some of them also had a rough day yesterday, but it got us thinking about Google and if they’re failing to innovate and thus failing to impress investors?
From many angles it looks as though Google is all about innovation. They look for great ideas all over the World and acquire them when found. They give employees about one day a week to develop their own project which screams innovation. And speaking of employees, they’re able to attract some of the best of the best out there. There’s no doubt that they’ve got loads of talent. Up until recently, the effort that they have made to be innovative has helped them push their way over the $700 dollar mark per share. Investors were impressed and jumped on the Google-wagon.
So what has happened over the last few months? There are multiple opinions on this one with some saying that it’s simply the economy while others say that every stock has its ups and downs and this is just one of those down times for Google. One idea to consider though is that Google simply isn’t doing enough new innovation to impress the investors and keep them pumping money into Google.
Recently I stumbled upon a list over at Google titled “Ten things Google has found to be true.” There were two things on the list that really stood out:
- It’s best do do one thing really, really well (#2)
- Great just isn’t good enough (#10)
They say that their one thing is search, and it is. They’re great with search, there’s no doubt about that. So then why is it that they’re branching off and trying too many different things that end up being just okay and not great? They also say great just isn’t good enough and that they need to always deliver more than expected. “Through innovation and iteration, Google takes something that works well and improves upon it in unexpected ways.” As of late, they really haven’t delivered more than expected.
Whether Google stock is dropping because of the economy or it’s dropping because investors haven’t seen enough innovation, one thing is for sure and that is that Google stock owners are probably getting a little nervous as this point! And if you don’t own Google stock, hey, now might not be a bad time to buy.
@Ashley:
“We looked at some of Google’s competitors and it looks like some of them also had a rough day yesterday, but it got us thinking about Google and if they’re failing to innovate and thus failing to impress investors?”
I’ve been monitoring Google and other corporation’s performance at the stock exchange and noticed the continued Southern trend. Wall Street is very nervous and you can see that in the Dow Jones Index Average (12,065.31) and Nasdaq (2,232.21). Both indexes are far below what they were a month ago. The same is true with Amazon (65.60), Apple (125.65), Microsoft (28.99) and Yahoo (28.97).
IMO, the United States is in the initial stages of a recession and the cycle will hit the Stock Market in one way or another pushing the prices of shares down. How much? I wish I knew.
Google has an excellent track record in the Search domain as you correctly stated, but they don’t want to put all their eggs in one basket. They have been busy providing different services in an effort to lure consumers to these services and study their tastes and preferences. This information is very valuable to enhance their advertising strategies. “Know thy customer”.
Unfortunately Google steadfastly refuses to provide analysts with financial guidance, so they have to guess what the future revenues and earning will be. When Google doesn’t meet their expectations, then they announce that the sky is falling down on Google.
Google’s goal is to create a solid global network to store and manage all the information they can get their hands on. They want to be the super-computer of the world (cloud computing), and they have done a good job with setting up their “Googleplexes”. They have already started to move in the direction of the cell phones with the Android platform. There’s a lot of money in this territory and Google has demonstrated they play well in the search field. Now they want to apply their expertise in placing ads in cell phones adding more volume to their current huge cash flow. The recent European approval of DoubleClick certainly helps.
This is why Microsoft is so scared and wants to buy Yahoo to level the playing field. In my crystal ball, Google still has a lot of punch under their sleeve.
Just my two cents on this exciting subject. Of course I could be dead wrong.
Regards,
Omar.-
Google has bought many companies over the last couple of years, but some of those buys have not produced anything yet, like for example Green Border. You would think since Google wants users to feel safe and they would put out this product for everyone to use and users feeling safe would use Google more and more. Yet I still have not heard anything of this. Google needs to get busy make use of more of the companies they have bought. Then they will be seen as innovators again.
@ Omar: I tend to think like you do when you say Google still has a lot of punch under their sleeves. You just never know what they’re going to do.
@ Leland: Those were exactly my thoughts. Google has acquired so many companies yet we haven’t really seen many of those put to good use yet. They need to get the ball rolling!
How companies are really performing and how speculators get wowed or scared by the price movements of shares are two different things.
When Google went public, huge numbers of people got on the Google band wagon because it was…. Google. Perhaps now the shares are just returning to a more realistic level finally?
That could very well be the case. Give it a few months and I’m sure we’ll have that figured out…
Just like every big company, Google doesn’t innovate. At best, they buy someone who has something new and then they put it out under their brand. It’s still not coming from internally.
They have innovated a lot in the past though. I mean Gmail, Calendar, and, Spreadsheets (Docs was aquired), and Notebook were all pretty big steps I think. And I don’t remember reading about them acquiring companies for any of those products.
So where did these things not exist elsewhere? Innovation brings something truly new, those you mentioned are not new in technology or use, and heck, Microsoft does them better. Google did nothing but have their brand make the online version popular. Google does do a good integration of all these products but you have to ignore how much data they can collect about you. For me, that’s a concern.
And so I don’t totally bag on them. The way the did search originally was innovative (although their results suck these days). I’d give them credit for ads which fuels everything but I think history shows they bought a company or 2 that they were able to turn into something big. Internally though they are truly innovative with the network and scalability of systems. As someone who has worked in this field, it’s impressive.