Google is Moving to Understand China
Once Google did not do as expected in the fourth quarter the street hit them. It actually was not hit that hard but non-the-less it was hit.
What did Google mess up on? In a word, nothing. This is a great time to buy a company with a lot of potential still ahead of it.
What a lot of people were not expecting was the effect of Google Check Out. That is what hit revenue, and the bottom line. Some analysts will say taxes were favorable, but that is out of Google’s control, and I do not think it to be the case.
These ‘Check Out’ expenses will not be reoccurring, and current weakness should be used to buy the stock. Here is the potential I am seeing:
1. Video Ads. Revenue shared with users and content providers.
2. Mobile Search Ads.
3. Video Game Ads.
4. A leader in a still fast growing search Ads, and Ad placements.
These may seem obvious, but 2 and 3 will likely be key to Google’s success abroad (especially in China).
A recent New York Times article, originally published on 02/05/07 basically stated, Chinese users are under 30 and play video games and use mobile phones. Now Google is in the position to benefit from these areas of focus.
Google can now target the largest web users in China. With a recent partnership with China Mobile (the largest mobile operator in China), validates #2. And a recent acquisition of a video game ad placement company, GOOG is will be moving into this space too.
Too many positives have developed in the last few weeks to bash the company and its prospects. With 4th quarter earning under Google’s belt, and a depressed stock price, GOOG is interestingly priced, and should be bought.
