Filed under: Industry, Internet, Google (GOOG), Marketing and advertising, Technology

Google Inc. (NASDAQ: GOOG)’s ambition is to become the dominant advertising network across all mediums globally, which is one high mountain to climb. The company has built up a multibillion-dollar cash pile to help it on its quest, and it is in control of the world’s internet search market as well as the most-used video-sharing site.

It is dabbling in radio, print, and mobile industries heavily as well. The goal: to take a small cut of each advertising transaction or impression throughout all media forms.

If Google is successful, the company could experience growth way beyond the incredible numbers it’s now seeing every quarter. To get there, the company is trying to ensure existing and potential advertising partners know that controlling ad campaigns and directing marketing resources as efficiently as possible would be much easier if there was a central “dashboard” to manage all those ads across all markets and all mediums.
Sure, existing ad agencies promise this already, but with Google’s command of new media advertising, the sales pitch could hold more water here. Google’s North American head of advertising and commerce, Tim Armstrong, recently stated that Google’s presence in the print, radio, and television markets is poised to let ad partners manage ad inventory as perfectly as possible. Armstrong went on to say, “We’re intent on bringing more and more scale to the digital dashboard space … we’re very, very early stage on connecting those businesses. I think this is a two-, three-, five-year product that we’re going to work on.”

Anyone who is not convinced that Google intends to rule the market as its largest cross-platform advertising network, please raise your hand.

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Filed under: Good news, Competitive strategy, Google (GOOG), Marketing and advertising

When Google (NASDAQ: GOOG) says “Don’t be evil,” is the company just talking, or does it meant what it says? When it comes to actually dominating the world’s information (which is its goal, make no mistake), it’s hard to do that and not be evil.

But, when it comes to ridding its web index of malicious websites that could infect a user’s computer with viruses or other malcontent, Google is doing global web searchers a solid. Just because a web result lands in Google’s index does not mean there isn’t something dangerous lurking on that website that could exploit your PC in the worst possible way — perhaps without you even knowing it.

Last week, Google removed thousands of these websites from its global website index, and has now given regular web surfers the ability to report others as they come up. In other words, it’s trying to rid the world’s largest website index of useless junk that is mainly intended for criminal purposes. This is something that Google should have begun years ago, but it is good to see the web’s largest search provider start now.

A concerted effort by criminals to hijack top spots in Google’s ranking system has taken quite a while to accomplish, but Google is fighting back. Therein lies a huge future problem — if Google continues to dominate access to information around the world, it will become as big a target as Microsoft Corp. (NASDAQ: MSFT) has become due to the sheer numbers alone. Although Google may not be doing evil, it sure is the recipient of a lot of it.

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Filed under: Deals, Competitive strategy, Google (GOOG), Verizon Communications (VZ)

A week ago, the wireless division of Verizon Communications (NYSE: VZ) — Verizon Wireless — surprised the entire U.S. wireless industry by stating its intention to open its network to any compatible device running any phone-based application any customer wanted. In a country where wireless operators have been extremely close-minded about just about everything, this announcement sets the stage for things to come. The wireless industry is facing major changes.

Verizon trumped itself this week, announcing that Verizon Wireless would partner with Google (NASDAQ: GOOG) in its “open handset alliance.” When Google announced its Android mobile operating system platform about a month ago, the web’s largest search provider had lined up an impressive array of partners right from the start. Its goal: to remove all the “walled garden” roadblocks from mostly American wireless companies to allow any customer to use any phone on any network by guaranteeing cross-carrier compatibility. Now, technically, the two actual radio standards in use among wireless companies in the U.S. will need addressing, but that comes later.

Until then, Verizon is enjoying a plethora of good press in embracing Google’s “open” access model. Perhaps Verizon recognizes that the wireless landscape is set to change soon and it wants to get in its good graces through a potential large competitor, Google. After all, Google announced its intention to bid on upcoming radio airwaves next month (with unknown ambitions at this time), so established telecom companies may see their world turned upside down in the next five years. After a controlled amount of competition and a tight control on the customer, these changes will be most welcome by customers — and hopefully wireless providers.

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Filed under: Rants and raves, Google (GOOG), Yahoo! (YHOO)

In a world with failing mortgages, terrorist attacks, the rise of the Chinese economy and greenhouse gases stewing inside the Earth’s environment, it’s comforting to hear that the top search term on global internet property Yahoo! Inc. (NASDAQ: YHOO) was — wait for it — Britney Spears.

From viewing the top-10 search terms from Yahoo!, one would think the brainless antics of every teenager on the planet was in control of every web browser in our world. While I’ll reserve an opinion on Google, Inc.’s (NASDAQ: GOOG) top search terms, my impression on Yahoo!’s web search audience is now pretty clear. Oddly, though, the demographic that would be searching for such mind-numbing terms like these are precisely the target many advertisers are looking for. Yay (yawn).

Here are the top-ten, in order: Britney Spears, WWE, Paris Hilton, Naruto (a Japanese manga series), Beyonce, Lindsay Lohan, RuneScape (an online game), Fantasy Football, Fergie and Jessica Alba. Sounds like a who’s who of teenage stars and media smut. Nice.

Why do so many millions (or billions) of web surfers care about a has-been teenage diva, or a has been party trash girl? Beats me. But, it does prove one thing — the world’s web surfers can be obsessed by goofy media types and mass-manufactured entertainment personalities. This is kewl while I LOL.

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Filed under: Google (GOOG), Cisco Systems (CSCO), Research in Motion (RIMM)

MarketWatch today has an interesting interview with Jason Weiner, the manager of Fidelity Growth Discovery Fund. As an individual investor, while I don’t always parrot what institutional investors do, I do find that understanding their thought processes and seeing how they themselves make sense of data and the markets is really useful as I make my own investment decisions.

For those who know a little bit about Fidelity funds, the Growth Discovery Fund used to be called the Fidelity Contrafund II, which Weiner himself managed from 1998-2000. This year through Dec. 3, the $1.6 billion fund was up 26.2%, landing in the top 5% of its large-cap growth category, according to investment researcher Morningstar Inc.

Google
Weiner likes Google Inc. (NASDAQ: GOOG). Weiner says of the search giant, “I don’t think there’s [strong] threats to their paid search advertising model.” Interestingly, Weiner says that Google’s biggest threat is not being a one-product pony, as many analysts and pundits criticize the company. Rather, Weiner is nervous about the expansionist drives of Google management into businesses that may not be nearly as attractive as paid search.

I like Google here as well and have written about Google’s vision of blurring the distinction between the desktop and the Internet. I also believe that Google Docs rock and are a huge first step at really competing with Microsoft Corp. (NASDAQ: MSFT).

Research in Motion
Weiner is a fan of Research in Motion (NASDAQ: RIMM). He thinks that the cult-like, vocal following of loyal Blackberry users bodes well for the firm. The Fidelity fund manager thinks there is plenty of upside in terms of market share given the fact that there are only 10 million Blackberry users. Weiner feels that RIMM has to work extra hard to stay ahead of obsolescence with new hardware and software updates needed at close intervals.

Cisco
In Weiner’s tech-heavy portfolio, he also favors Cisco (NASDAQ: CSCO) as the “pipe-layer” for Internet traffic. He praises Cisco’s “gorilla-like dominance” but recognizes potential sensitivity the tech company might feel in an extended economic slowdown.

Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author holds a long-term position in Google and has clients invested in Cisco.

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Filed under: Analyst reports, Google (GOOG), Apple Inc (AAPL), Research in Motion (RIMM), Options, Technical Analysis

CNBC’s Jim Cramer has noticed that when the market has a tough day, mutual fund managers still like to buy certain momentum stocks like Google Inc. (NASDAQ: GOOG), Apple (NASDAQ: AAPL), and Research in Motion (NASDAQ: RIMM). They do this to keep these stocks’ prices up which will reflect positive performance for their fund. Cramer thinks these stocks will not go down because the buyers will not quit. He suggests buying calls deep in the money, but we like selling puts instead. This way, your profits are locked in if the stock rises, stays flat, or even drops a little. If you are inclined to agree, then it could be a good time to get into a bullish hedged trade on GOOG.

After hitting a one-year low of $437.00 in March, the stock hit a one-year high of $747.24 in November. GOOG opened this morning at $692.73 and so far has hit a low of $687.50 and a high of $693.00. As of 10:45, GOOG is trading at $691.74, up $7.58 (1.1%). The chart for GOOG looks bullish but deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

If you agree with Cramer, then for a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $610 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in less than 3 weeks as long as GOOG is above $610 at December expiration. Google would have to fall by more than 11% before we would start to lose money.

GOOG hasn’t been below $610 since early October and has shown support around $680 recently. This trade could be risky if the momentum comes out of this stock, but even if that happens, there should still be some support around the $625 level.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in GOOG, AAPL or RIMM.

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Filed under: Google (GOOG), Options

Google (NASDAQ: GOOG) will be participating in the 700 MHz spectrum auction that begins in January. Bank of America says: “We believe GOOG has largely applied for the auction as gesture of good faith in conjunction with its aggressive lobbying of the FCC for open access conditions.” BAMO goes on to say: “We are therefore skeptical GOOG is looking forward to outbidding VZ in a $5+ billion contest for the privilege of spending a $7+ billion to build out a network.” GOGG December straddle is at $44.40. December front month equity options expire on 12/21/07.

Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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The casualties of the housing market are hitting Southern California even in middle class neighborhoods. Countrywide CEO Angelo Mozilo is pushing for Fannie and Freddie to raise their caps to $625,000, in a push to socialize the housing bubble. This is on the back of a previous request of raising rates to $850,000. As you will see in today’s Real Home of Genius, we are starting to see decent homes in middle class areas reaching caps that are already in place. There is no need to push for higher caps. If you haven’t noticed unscrupulous lenders will push buyers into the maximum loan caps and buyers will not read their contract and take on whatever debt is put in front of them. The caps are there for a reason and right now isn’t exactly the best time to be asking Freddie and Fannie to take on more responsibility considering they are still trying to shore up liquidity to remain stable. Raising caps by 50 percent isn’t exactly the best thing to do. Keep in mind that a recent Goldman Sachs report highlighted that Fannie and Freddie have about 15 percent of their mortgage portfolio in the California housing market while Countrywide and Washington Mutual have an astounding 45 to 50 percent. Is it any wonder why these lenders are pushing so hard for caps to be raised? This will help no one except irresponsible lenders that fed on greed and now want the government to bail them out for weak lending standards. They try to generalize homeownership and feel that casting a wide enough net, people in other states won’t notice that California home prices are $250,000 to $300,000 above the $213,000 nationwide median home price. But I digress since the housing complex is salivating for a .50 Fed rate cut next week and we are seeing stocks rally especially in the housing sectors since some are betting that the government will allow these lenders to handoff the dung-filled mortgage football to taxpayers.

Up until this year, most of the price cuts we were seeing in California were in lower priced areas or new homes built out in the fringes of the big cities. Now what we are seeing is major price reductions in solidly middle class areas. We’re not talking about minor price drops, we are talking about 20 percent reductions in one year. This is significant for various reasons. For one, many people will reassess their properties next year and state budgets will suffer on overly optimistic predictions. It is yet to be seen the overshoot of state budgets but we should find out by the second quarter in 2008. Looking at Treasury rates it looks like we are already in a recession but contrary information such as solid employment and inflation is keeping the market in a bipolar state.

Today’s Real Home of Genius is located in La Mirada. This 1,700 square foot home has 4 bedrooms and 2 baths. Now we are actually starting to talk about a true starter home for middle class families. I’m not sure I dig the massive chimney but hey, more room for Santa to come down and bring you your mortgage payment. Let us take a look at some of the pricing history on this home:

Sale History

06/05/2006: $545,000

05/16/1978: $60,500

The home was purchased last June for over half a million dollars, not uncommon here in Southern California. Yet with the housing market turmoil and quickly changing market let us take a look at the current activity:

Price Reduced: 10/02/07 — $490,000 to $475,000
Price Reduced: 10/12/07 — $475,000 to $439,000

This short sale has a one year price reduction of $106,000; including sales costs this translates to over a 20 percent decline in one year. We can now safely say that we are in stage 2 of the housing bear market. Short sales are increasing and now middle class areas are having significant price reductions. This again goes back to my critique of the current Hope Now Alliance seeking to freeze rates on subprime borrowers. Many people will be facing issues in prime locations that on paper, look like the model of fiscal responsibility. And let us be honest, subprime has become a pejorative for lower class home buyers when in reality subprime fits a larger portion of the population. This housing decline will impact more people than the government, Wall Street, or lenders would like you to believe.

So let us examine this home further. Let us assume that you are going to buy this home with 5 percent down since no money down and other NINJA loans are slowly disappearing if not completely gone. With 5 percent down ($21,950), guess what, you will be taking on a mortgage of $417,000. This number looks familiar doesn’t it? So much for pushing for larger caps.

Rent vs. Buy Analysis:

Price of Home: $439,000

Down Payment: 5 percent

Mortgage Terms: 30 year fixed at 6 percent

PITI: $3,222

Tax Savings: $607

Net House Payment: $2,616

Median Rent of Home in Area: $2,405

There are many ways to get a quick idea of local rents by doing a quick drive through or looking at sites such as Rent-o-meter. If we are to assume that the additional money saved will yield a 7 percent after tax return, the purchase of this home will break even in 2.7 years. Now we’re starting to get to some more reasonable scenarios. Make no mistake, it will always be more expensive to own a home because of equity build up, tax savings, and other non-tangible factors of being a homeowner. Yet in a declining market depreciation become a liability as we are starting to see. But right now we are in a completely different world. As you can see from this one example, these are the type of ratios that will be more common in 2008-2010 as they should be. The average household income in the area is $74,268. So let us break down the income numbers a bit further:

Monthly gross household income: $6,189

After tax monthly income: $4,830 (with 2 exemptions filing as married)

So with the above scenario you are spending slightly above 50 percent of your gross pay on housing. This in California is common and just take a look at some of the other Real Homes of Genius where the ratio hits 80 and sometimes 90 percent. The main point you should take away from this is that when housing does bottom out, local area incomes will matter in relation to price. No need for increasing caps or absurd complicated proposals; simple historical fundamental standards based on income and financial prudence served us well for many decades and they will continue to do so. Historically this has always been the case and this bubble bursting will return us to the fundamentals. Back to the basics; from CDOs and SIVs to ABCs.

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Filed under: Analyst reports, Google (GOOG), Apple Inc (AAPL), Research in Motion (RIMM), Options, Technical Analysis

CNBC’s Jim Cramer has noticed that when the market has a tough day, mutual fund managers still like to buy certain momentum stocks like Google Inc. (NASDAQ: GOOG), Apple (NASDAQ: AAPL), and Research in Motion (NASDAQ: RIMM). They do this to keep these stocks’ prices up which will reflect positive performance for their fund. Cramer thinks these stocks will not go down because the buyers will not quit. He suggests buying calls deep in the money, but we like selling puts instead. This way, your profits are locked in if the stock rises, stays flat, or even drops a little. If you are inclined to agree, then it could be a good time to get into a bullish hedged trade on GOOG.

After hitting a one-year low of $437.00 in March, the stock hit a one-year high of $747.24 in November. GOOG opened this morning at $692.73 and so far has hit a low of $687.50 and a high of $693.00. As of 10:45, GOOG is trading at $691.74, up $7.58 (1.1%). The chart for GOOG looks bullish but deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

If you agree with Cramer, then for a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $610 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in less than 3 weeks as long as GOOG is above $610 at December expiration. Google would have to fall by more than 11% before we would start to lose money.

Continue reading Cramer: Google to keep moving higher

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Filed under: Major movement, Good news, Management, Jones Soda (JSDA), Options, Technical Analysis

Jones Soda Co. (NASDAQ: JSDA) shares are trading higher today after the company announced that its founder, Chairman and CEO Peter Van Stolk will step down from his positions by the end of the year. He will remain with the company as a board member. Board member Scott Bedbury will serve as interim chairman, while board member Steve Jones will serve as interim CEO during the company’s search for a replacement. If you think that the company won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JSDA.

After hitting a one-year high of $32.60 in April, the stock notched its one-year low of $5.86 yesterday. JSDA opened this morning at $6.08. So far today the stock has hit a low of $6.00 and a high of $6.19. As of 10:25, JSDA is trading at 6.16, up 0.22 (3.7%). The chart for JSDA looks are bearish and steady.

For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $5 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in just 3 and a half months as long as JSDA is above $5 at March expiration. Jones would have to fall by more than 18% before we would start to lose money.

Continue reading Jones Soda (JSDA) CEO to resign

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