Thoughts On Google
GOOG has seen its stock take a hit over the last couple days on the news from YHOO's CFO that ad revenue was a bit weak within its financial and auto verticals.
Now, it is difficult to speculate on GOOG making its quarter due to the secrecy that the company employs. I suspect even if GOOG was experiencing the weakness YHOO is that the Street would likely not even hear about it, at least from management.
That said, I don't think GOOG is experiencing the same weakness. Today I heard that YHOO's ad display revenues were the ones affected, while GOOG is far less exposed to ad displays versus traditional search. Also, I have heard that GOOG's international revenues are strong this quarter.
Moreover, YHOO gapped lower after reporting in July, so some carryover weakness should not be surprising. This didn't happen to GOOG. GOOG has beat estimates handily the last 2 quarters, YHOO has not.
Yet YHOO is still given a premium valuation relative to GOOG (39x vs. 31x on 2007, respectively). I think this is absurd, given GOOG's superior growth and better execution of late. Put YHOO's multiple on GOOG and you get a $500 stock price. Go figure.