
Google stock spikes after reporting better than expected Q2 earnings - zhuxuefeng1994
http://techcrunch.com/2015/07/16/google-q2-2015-earnings/
======
aresant
"On the conference call, Ms. Porat noted that mobile cost per clicks continued
to strengthen, and that the gap between desktop and mobile is narrowing." (1)

It's no surprise that after the "mobilepocalypse" earlier this year we're
seeing mobile profitability grow for Google.

Google effectively forced advertisers hands in bundling their inventory and is
agressively raising min CPC in a number of categories (2)

And they are breaking many of their OWN rules about how aggressively one can
promote advertising on mobile - excellent, and entertaining breakdown of that
here -> [http://www.seobook.com/google-goes-mobile-
unfriendly](http://www.seobook.com/google-goes-mobile-unfriendly)

I don't have much of a point other than sharing some of the information behind
what's actually driving these earnings, and the major changes I've seen /
experienced as a guy that spends a lot with the GOOG.

(1) [http://www.wsj.com/articles/googles-results-top-
expectations...](http://www.wsj.com/articles/googles-results-top-
expectations-1437077741)

(2) [http://searchengineland.com/google-showing-fewer-ads-per-
sea...](http://searchengineland.com/google-showing-fewer-ads-per-
search-219834)

(3) [http://www.seobook.com/google-goes-mobile-
unfriendly](http://www.seobook.com/google-goes-mobile-unfriendly)

~~~
choppaface
There's an Adobe study that shows that Google appears to be cutting
impressions (of bad ads?) to boost CTRs and CPC; the same report shows
Facebook is handily clobbering Google in CTR / relevance:

* [http://www.zdnet.com/article/googles-mobilegeddon-moves-hitt...](http://www.zdnet.com/article/googles-mobilegeddon-moves-hitting-marketers-sites/)

Perhaps Google is trying to boost CTR / relevance in order to attract/retain
the more valuable advertisers (who would probably otherwise weight Facebook
more highly for its better targeting). I really wonder how much of this growth
is just Google (and Facebook) extracting more marketing dollars from the
biggest spenders.

~~~
asuffield
I'll just point out that this is a graph of CTR growth y/y, not CTR. It's easy
to grow faster when you're further behind.

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mythz
Google also just became the 2nd most valuable company in the world behind
Apple:
[http://techcrunch.com/2015/07/16/google-q2-2015-earnings/#.e...](http://techcrunch.com/2015/07/16/google-q2-2015-earnings/#.eoqvzq:ZMhf)

Which both look in great shape for the Post-PC future having control of the 2
most dominant mobile platforms.

~~~
adam12
> Post-PC future

I'm still not convinced.

~~~
mythz
iPhone revenue alone is bigger than the revenue of any other Technology
Company.

~~~
amalcon
Because _revenue_ is for some reason the best way to measure the impact of a
technology...

~~~
jshen
novelly every person in the world will have a smart phone. Many will not have
a desktop or laptop. Need I say more?

~~~
archagon
And yet, I expect that those laptops will be the ones doing most of the hard,
creative, technical work. There will be less of them than mobile devices, but
does this mean they'll be less important? If anything, they'll be more
important than ever!

~~~
IgorPartola
This discussion is not about some abstract concept of value. Here value means
cash money. There will likely be 100x-10000x more smartphones to laptops
ratio, and most of the ecommerce will be done with the smartphone. Buying
things on the web is what makes companies like Google valuable. Because of
this, being ready for the majority of the Internet use to come from
smartphones is going to be a big factor in their long term success.

------
hkmurakami
Note that both GOOGL (+12% AH as of writing) and GOOG (+11% AH as of writing)
both exist and are distinct.

(The former has voting rights)

~~~
r00fus
Is there honestly any scenario where the two won't be so closely correlated as
to not be equivalent?

~~~
nostrademons
Imagine a case where Google's business tanks, shareholders wish to oust Larry
Page, Larry & Sergey obviously won't budge, but activist shareholders manage
to get Eric Schmidt on board. Eric + virtually _all_ of the class A shares is
enough to get voting control of the company (when the class C shares were
created, it was because the voting rights of Larry + Sergey were just barely
over 50%).

In this scenario, the class C shares will fall dramatically because the
financial value of Google will be nearing nothing, but it's likely that the
value of class A shares will skyrocket. Because an activist needs virtually
all of them to rest voting control from the founders, there's a "corner the
market" situation where the last few remaining holders can demand very large
prices for their shares.

~~~
discodave
The difference in share price won't be that big. Your analysis isn't wrong,
but you haven't followed it all the way through.

If there is a big difference in price then that's an arbitrage opportunity for
somebody, in the end all shares have the same claim on the company and will
get the same payout if Google is bought or split up. In this case there would
be a bunch of people buying class C shares in anticipation of the activist
shareholders winning. Additionally, the price of the voting shares won't go up
that much because the activist investors can't pay more than what they
perceive the value of the company to be.

~~~
nostrademons
There's a very different risk profile for the buyers of class A shares vs.
class C shares in the scenario above. The activist shareholder is trying to
_make_ the future happen; the passive shareholder is trying to _predict_ which
future will happen. The activist shareholder has a lot more information
available to him, notably how close he is to winning control of the company.
Some of that information may leak via the stock price and cause a run-up of
class C shares, but a passive shareholder faces significantly higher risk when
trying to assess the likelihood of activist shareholders winning a proxy
battle, because _they don 't know how many shares the latter has_.

It's much like how Porsche cornered the market in Volkswagon shares. Until the
last couple hours, the market at large had no idea how close they were to a
corner.

Also, remember that the price of a stock is set at the margin, but the value
of one's holdings is an average. Imagine that an investor has amassed 100M
shares of Google at an average price of $20. If they get to 100,001K, the
value of Google will shoot up to $50. It is rational for them to pay any price
up to $3M for those last 1000 shares, because their profit if they get them
all is $3B, but if they are missing even one of them, they get nothing.

Same reason eminent domain laws exist: without them, it is rational for a
large organization to pay any amount up to the total value of the project to
the last few holdouts that are preventing it from being completed.

------
arthurcolle
Hopefully GOOG won't lose its way with its unrelenetless search for profits as
opposed to incentivizing its devs to make cool products. That being said, good
job new CFO

~~~
sokoloff
[unrelentless] is not the word you're looking for.

unrelenting (or relentless) probably is.

~~~
justwannasing
I would not expect less of any company and any company that didn't do so will
die.

~~~
amake
The point was that "unrelentless" is not a word, and even if it was, it would
mean the opposite of the intended meaning.

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guelo
As Youtube gets more and more annoying it makes Google more and more money.
The advertising business sucks.

~~~
jaydz
I'm hoping Youtube implements a subscription model. I will gladly pay to skip
the 15-30 seconds ads on every video.

~~~
bkjelden
My fear with this is that it'll end up like cable tv: you pay for it _and_ you
get to watch advertisements.

~~~
psbp
There's precedent with Youtube Music Key. $10/month is a lot to pay for
removing ads from music videos alone, but given that it's bundled with the
overall streaming service, it's a pretty good deal.

------
eitally
I wish they split out revenue for their Enterprise (Google for Work) division.

