Google surprised Wall Street when it failed to meet its financial expectations for the fourth quarter, making its stock go beserk. Reportedly, analysts are explaining the phenomenon to be a result of Google being involved in so many avenues that the investor community is failing to recognize Google as a brand. Google first started as a major search engine, and in the past two to three years, it got itself involved in televisions, Android mobile phones and music sales. Investors are also still uncomfortable with Google's purchase of Motorola Mobility.
Google's shares are down
In the fourth quarter, Google also surprisingly lowered its search advertising rates. Given that Google has a lot of new, young initiatives like Google+ and Android, analysts are wondering if Google even has a strategy for generating revenue. According to Walter Price, a portfolio manager at RCM Capital Management, Google's managers are very excited about their future but when you look at the way their stock is treated, the excitement isn't shared. Google's stock closed at $569.49 (Rs. 28,535 approx) on Wednesday, which is down from their four year high of $670.25 (Rs. 33,584 approx).
Google can be compared to Amazon who, in October said that they would lose money in their fourth quarter because of their investment in the Kindle Fire among other projects. Their earnings report is due on the 31st of January. BGC Partners analyst Colin Gillis says that Google's Motorola acquisition will lop 600 basis points off of Google's profit margins.
Still, Google's acquisitions have not all been for loss since Larry Page took over from Eric Schmidt as Google's CEO. His primary task was
to shut down projects that just weren't doing well and support projects that were successful. Google has had success with YouTube and Android, where the latter is the number one mobile OS in the world right now. Google+ too shows potential with the amount it's growing. It currently has 90 million users.