Monday, October 22, 2012

Google Inc (NASDAQ:GOOG): Too Soon to Write off At This Juncture

Google Inc(NASDAQ:GOOG) did report dismal results for the third quarter in 2012 and the figures did show that its core advertising business is slowing down.

But it is too soon for doomsday prediction as many in the analyst fraternity seem to be doing.

Questions are already being raised about the Internet search giant's future ability to get profits from search and mobile devices. It is a tough market as a mobile device is seen as peculiarly personal and customers may be less inclined to click on ads compared to a traditional computing device.

However it is not an impossible market to conquer. It is a challenge for sure and there are numerous claimants to get a slice of the mobile ads market. Google, Facebook, Microsoft are all in the race to translate their user base on mobile into paying customers.

Chief executive and co-founder Larry Page insisted, in a conference call, after the results were erroneously released, that the company was in a good position to capitalise on its mobile business.

Even though the company had earned less on mobile ads than what it did on desktops, still the company's revenues from mobile ads was $8 billion a year, he said.

Incidentally, its cost-per-click, a vital parameter that measures profitability, dropped 15 percent during the quarter, the fourth consecutive quarter that it has seen a decline.

However a single quarter cannot negate Google's sound business model. These are unusual times and a global slowdown is bound to have some effect.

There are analysts who swear by the long-term prospects of the stock and are thinking of accumulating more of its shares to leave to their children.

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