Google Watch

I don’t know what Google will do tomorrow. I hope it goes down because I got caught with a bunch of $340 puts I meant to sell at the close so I’m praying people are sane in the morning! At this point I will be dumbfounded if they make it through earnings above $300! They did get a favorable ruling on a copyright case but it was not that meaningful and there are many others ahead of them (think Merck-like constant legal issues) but the spin can be that it sounds good. At least they seem to be getting their money’s worth as they begin to spread it around Washington: http://news.com.com/2061-10796_3-6050741.html?part=rss&tag=6050741&subj=news The fact is that it has now gotten to the point where people are posting form letters on how to stop Google from infringing on your copyrights sites like this one: http://chillingeffects.org/dmca512/notice.cgi?NoticeID=232 More relevant, is this Washington Post article on click fraud which may have been a contributing factor in Google’s steep decline yesterday: http://www.washingtonpost.com/wp-dyn/content/article/2006/03/15/AR2006031502339.html The fact that there is an auditing firm called ClickFacts and that people who spend $500K a year are hiring them to go backwards and audit Google could be a disaster for the company. Imagine if they are forced to return 35% of the $6Bn they billed last year, that would be all of the profits and then some! “For $29 or so, anyone can buy fake traffic generator software such as Smart HitBot, Fake Hits Genie and Fakezilla, programs that can send bogus traffic to any Web page or ad.” D’oh! There’s a whole industry based on scamming Google! “But click-fraudsters have to watch out because more and more electronic sleuths are trying to catch them. Start-ups with names like Click Tracy, Click Detective and WhosClickingWho analyze traffic and tell advertisers about suspicious activity, such as a surfer in Malaysia repeatedly clicking on ads for a dentist in Baltimore.” Double d’oh! And there’s a whole industry that will be auditing Google! Despite all this Bear Stearns maintained an “outperform” on Google despite recognizing that they “could see pressure on advertising click-thru rates.” http://www.forbes.com/markets/2006/03/15/google-yahoo-0315markets10.html I guess BSC thinks the market is going way down for Google to be outperforming it after earnings! ===================================== And now for the good part! Do a search on “Kid fools Google News” in Yahoo and you will get many references to this article: http://www.haaretz.com/hasen/spages/694502.html Try running the same search in Google and you get NOTHING!!! WOW!!! This is proof positive that they censor content that they find “objectionable.” No wonder they are getting along so well with the Chinese government. We’ve come across examples like this in the past but this is beyond doing evil, this is doing evil and covering it up. This is Nixon level evil! http://www.publish.com/article2/0,1895,1938447,00.asp On a similar topic, we already know that relevancy is iffy in google searches but as more and more sites and services appear teaching people how to “game” the system, how long will it be before automated searching becomes useless altogether. I propose that Venture Capital guys give me just $100M and I will start a service that hires professional web readers (that’s people like you, except they get paid) to comb through the internet and create a search engine that returns only the best results as determined by an actual caring person – sort of like Reader’s Digest for the web. I used to run a research company and I can actually do this in case anyone’s interested! ===================================== Now that the news is being questioned, what are we going to rely on these guys for. Oh yes, they want to be our “Hard Drive on the Web.” That’s right, Google is projecting “Big Things” (ie. more GSU’s for everyone!) from GDrive, which is their grand plan to store all your files on the internet. Unfortunately, this is not a very difficult thing to do and Microsoft, Yahoo and Amazon have now decided to do the same thing, in fact Amazon already has 150,000 beta users of AWS (Amazon Web Service). Rumor has it that Amazon is taking their A9 search engine to another level that will go head to head with Google in the near future! A9 already has an interesting program that pays you to search (1.57% off on Amazon purchases). Ignoring the fact that the Government has just demonstrated that giving Google (or anyone else) your data is the same thing as giving it to any agency with a genral subpoena (I know, if you have nothing to hide, what do you care…), all this competition makes it a real “me too” event. ==================================== Larry Page dumped 133,000 shares yesterday at $345 but he still has 75,000 of the shares he converted this week left to sell. This is interesting because it has been a month since Larry last sold and he was the only guy that gave me hope that not everyone was dumping… http://www.form4oracle.com/company?cik=0001288776&ticker=goog&page=1 You can see on the graph of insider activity the serious spike in selling we are in the midst of. You can also see George got his usual “gift” of 2 sets of 16,666 shares on the 9th and John Rosenberg (VP Prod Mgmt) got 2 sets of 16,167 which makes me really think they are trying to tell us something with Reyes’ share number as I had previously thought it was just a math coincidence but why wouldn’t John get the same? So now it turns out that Johnny is also getting a monthly bonus of 32,000+ shares of Google as a cool $11M monthly augmentation to his salary. Only bosses who have no concept of money can throw $140M annual bonuses at people in a company that makes $1.5Bn (until the audits, anyway). If these “gifts” were just limited to George and John, that would be $280M, close to 20% of Google’s annual profits, given as a bonus to fill 2 positions! By comparison, the ENTIRE SG&A of Yahoo is $365M!!! Google’s SG&A is close to $1Bn already and that is without expensing what is projected to be $1Bn+ of option grants annually. It should be no surprise then that while Google had $1Bn more in sales (again pending audits) than Yahoo, Yahoo made close to $500M more for it’s shareholders. But like Eric told us: “The company isn’t run for the long-term value of our shareholders but for the long-term value of our end users.” Google filed their 10K report yesterday and Mr. Wave Theory did a great and entertaining job of going over it for us: http://www.mrwavetheory.com/2006/03/googles-10-k-is-out-today.html Another Blog created by X Google employees wonders why anyone would buy Google at all since their unique share structure (Larry and Sergey have total voting control) means that there is no possibility of stopping the company’s many excesses: http://xooglers.blogspot.com/2006/03/speaking-of-trouble.html ===================================== In news from the real world, someone besides me finally noticed CY was underrated! http://www.forbes.com/markets/2006/03/16/cypress-semiconductor-0316markets18.html