Filed under: Deals, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO)

Google Inc. (NASDAQ: GOOG) and Yahoo! Inc. (NASDAQ: YHOO) agreed to delay their advertising sales partnership while the Justice Department reviews the deal. The news may look like a retreat by Google, but it undermines one of the key reasons Yahoo! gave for staying independent from Microsoft Corp. (NASDAQ: MSFT). Google was going to improve Yahoo!’s revenue.

It looks like there is some chance the partnership will not happen at all. That would justify the fact that Yahoo!’s stock is down by more than half from its 52-week high. Yahoo! indicated that the wait might be short. “The companies have agreed to a brief delay in implementing this agreement to continue our ongoing discussions with the (U.S.) Department of Justice,” Yahoo! said in a statement. “We have had discussions with regulators and look forward to responding to their questions about this agreement.”

The trouble is that Justice can take its own time. It’s under no pressure to give an answer in short order. The news also begs the question of whether the two companies will wait for antitrust reviews in the EU and Canada.

Each day that passes without Yahoo! having a sales relationship in place with Google is a day its earnings do not recover.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Management, Google (GOOG)

Google, Inc. (NASDAQ: GOOG) CEO Eric Schmidt has sung the praises of many things in the past: consumer experience, mobile product offerings and even Google’s philanthropic efforts. At the same time, Schmidt has made sure Google has evolved into a ruthless competitor that has really blindsided the internet marketplace in so many ways so fast that it caught most of us off-guard.

But can Google seriously save the world? Although tech pundits sometimes state that in tongue-in-cheek fashion, Schmidt is dead serious about it. Google’s massive global infrastructure requires a ton of energy to operate. As we all know, energy costs are not exactly low. Although newer Google data center sites are chosen partly for cheap energy proximity, that’s not enough. The company wants to fix the energy problem in the U.S., and they have a plan.

The “Clean Energy 2030” plan aims to relieve the U.S. completely from dependence on fossil fuels within 22 years. Schmidt indicated that the $4.5 trillion cost will be paid back with $5.5 trillion in savings. Schmidt told Cnet that “we save a lot of money when prices go down. It’s good for shareholders, good for earnings.” It’s not that Google is just in this for the savings, right? That’s your call to make.

Regardless, helping wean the U.S. from foreign energy sources is the holy grail for many bright minds in this country, including Google founders Larry Page and Sergey Brin. Schmidt continued by referencing the $700 billion bailout (it’s probably more than that by now), stating “why not use that money to solve once and for all the things we debate: energy security, rising oil prices, a lack of jobs–especially in rural areas–(and) a lack of technology investment?” We’ll be waiting today for the answer from some of the bright minds as well as pinheads in the U.S. government.

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Filed under: Products and services, Google (GOOG)

According to Taiwan’s CENS website, T-Mobile USA will sell half a million of the Google, Inc. (NASDAQ: GOOG) G1 smartphone built by Taiwan’s own HTC and sold exclusively (so far) by T-Mobile USA. Although that’s not up to par with announced Apple, Inc. (NASDAQ: AAPL) iPhone 3G sales, it’s no slouch expectation either.

When the G1 phone is released for sale on October 22, that leaves just over two months for that projected sales figure to be hit. Although the unit will cost a relatively paltry $179 with a two-year contract, can T-Mobile USA really hit that sales number? I have severe doubts, although T-Mobile USA will easily be able to start competing with established players like Apple in 2009.

Although Apple has an entire year headstart over rivals like the G1 and the Samsung Instinct, there are many customers who want the novelty of a touchscreen smartphone but don’t want to be locked down into the Apple ecosystem — even though it works very well and would serve most customers 100% perfectly.

But then again, Apple’s first-mover advantage and its incredibly powerful marketing muscle may just keep it floating above the likes of the Google-powered G1 for quite some time. Google’s efforts with the G1 could make it a second-tier player here while Apple dominates. That is, unless, T-Mobile USA starts off quick with half a million in unit sales this holiday season and never looks back. What is your projection?

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Filed under: Competitive strategy, Google (GOOG), Apple Inc (AAPL), Hewlett-Packard (HPQ), Nokia Corp. (NOK), Research in Motion (RIMM)

The prevailing wisdom would have to be that there are too many smartphones on the market. Nokia (NYSE: NOK) just launched one to compete with RIM (NASDAQ: RIMM) and Apple (NASDAQ: AAPL). Google (NASDAQ: GOOG) is releasing the G1 later this month. Most of the other large handset companies are also in the business. But Hewlett-Packard (NYSE: HPQ) now wants to jump in.

According to The Wall Street Journal, “The new phone will likely be released in Europe within the next two months.”

Given the amount of competition in the market, it is hard to see how HP will be able to pick up much market share. It is hard to imagine that it can offer features beyond those the iPhone and BlackBerry already have.

The problem with the new device may be greater than that. HP has had the image of being a “winner” over the last two years as financial results have increased. Its PCs and printers are leaders in their fields.

Investors would think that HP would want to dodge a failure in a crowded market to avoid the market looking at the company as one that makes poor product decisions and tries to expand beyond its core franchises. To make matters worse, HP will probably never sell enough phones to meaningfully add to its revenue.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Industry, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Marketing and advertising

Yahoo!’s (NASDAQ: YHOO) shares hit another multi-year low, trading down to $15.54, off by more than half from its 52-week high of $34.08. That high was driven by a buyout offer from Microsoft (NASDAQ: MSFT), but Yahoo! now trades well below the level where it changed hands before Redmond came calling.

Yahoo!’s market cap is below $22 billion. By some estimates its ownership of Yahoo! Japan and Chinese e-commerce company Alibaba are worth $10 billion. That means that Yahoo!’s core business trades at only two times sales, a remarkably low figure.

Two fears have pushed Yahoo! down. The most obvious is that its share of the search market in the U.S. has fallen to about 20% and continues to drop. It may form a partnership with Google (NASDAQ: GOOG) to push up its revenue in this arena, but the deal is being challenged by antitrust authorities.

The major reason behind Yahoo!’s drop is one that would tend to push the shares down more over time. Wall Street has believed that internet display advertising, Yahoo!’s key revenue business, would continue to grow at rates of more than 20% for the next several years. Recent evidence is that many marketers do not consider online display ads to be very effective, maybe even less effective than TV. Some large internet firms have watched their growth rates drop to single digits.

Yahoo! may be up against a problem that has no easy solution.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Google (GOOG), Marketing and advertising

Not a day goes by that the market is not obsessed with the latest move or product launch at Google (NASDAQ: GOOG). Most recently, the media has been all over the company’s energy initiatives and its Android smartphone launch. To a large extent, the coverage takes attention away from the fact that the recession is slowing the company’s size growth. But very few people seem to spend a lot of news cycles on that.

Google is currently having an internal debate about whether it should spend money to advertise its own brand and products. It is probably a waste of money because the company is already in a number of businesses that drive up its expenses without bringing in a dime.

According to The Wall Street Journal, “The search giant has recently held discussions with several Madison Avenue agencies, including Wieden + Kennedy and the boutique firm Taxi New York, about new efforts to promote some products, according to people familiar with the matter.”

The question is what does Google have worth promoting? It already owns the search business, so marketing that product would seem to be a waste of money. Its other major products for searching images, news and maps don’t bring in any revenue, so advertising them would appear to be burning money.

A lot of corporate advertising is meant to make management feel good. Google does not need name recognition and it is hard to see why the search company would want to promote one of the most famous brands in the world or any of its free offerings.

But Google does have cash to spare, and that usually drives a temptation to spend it.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Before the bell, Earnings reports, Analyst upgrades and downgrades, Deals, Google (GOOG), Apple Inc (AAPL), eBay (EBAY), General Electric (GE), Market matters, Bristol-Myers Squibb (BMY), BP p.l.c. ADS (BP), Marriott Intl’A’ (MAR), Lilly (Eli) (LLY), Economic data, ImClone Systems (IMCL), Federal Reserve, Potash Corp. of Saskatchewan (POT)

U.S. stock futures were flat to lower Thursday morning following the senate approval of its version of the $700 billion bailout package. Meanwhile, the Federal Reserve said it was considering a rate cut. Following all the economic data released Wednesday indicating the U.S. is in a recession, this isn’t surprising. The ECB is also meeting today to consider its move. Today, the Labor Department will report weekly initial jobless claims and the Commerce Department will release August factory orders. Regulators also extended the ban on short-selling shares of some 800 financial companies.

UBS (NYSE: UBS), which has been hard hit by the credit crisis, said Thursday it expects to return to profit in the third quarter after four quarters of losses. The bank has substantially reduced its exposure to U.S. commercial and residential mortgages. The bank wrote down more than $40 billion and raised close to $30 billion.

Mosaic (NYSE: MOS) shares are down about 20% in pre-market trading after it missed analyst estimates when it reported its fiscal first-quarter earnings.

Marriott International (NYSE: MAR) was expected to report earnings of 32 cents a share in the third quarter. The company reported 34 centsearnings per share excluding an 8 cents adjustment.

ImClone Systems Inc. (NASDAQ: IMCL) revealed late Wednesday its mystery suitor as none other than Eli Lilly and Co. (NYSE: LLY). Lilly was supposed to offer $70 a share by midnight and I have not seen reports yet that a formal offer was issued. Without one, Bristol-Myers Squibb (NYSE: BMY) will likely not hike up its own offer of $62 per share.
General Electric (NYSE: GE) - Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.A) is investing $3 billion in GE. The company also said it plans to sell at least $12 billion worth of common stock to the public. GE shares, however, are still declining this morning some 4.5% in pre-market action after getting hit more than 10% Wednesday at some point following an analyst estimate cut. It closed down 3.9% though.

Google Inc. (NASDAQ: GOOG) Wednesday unveiled a $4.4 trillion plan for reducing U.S. dependence on fossil fuels, advocating for greater adoption of alternative energy.

Apple Inc. (NASDAQ: AAPL) - BusinessWeek wonders Where does Apple go from here? suggesting Apple has reached a product plateu and while it shouldn’t slow down on the innovation front, perhaps it should concentrate on important innovations to existing products but most important, expanding Apple’s business and scope.

Analyst calls:

• Morgan Stanley downgraded eBay (NASDAQ: EBAY) from Overweight to Equal-Weight.
• Merrill Lynch downgraded Potash (NYSE: POT), Mosaic (NYSE: MOS) and Agrium (NYSE: AGU) from Buy to Underperform.
• Merrill Lynch downgraded Monsanto Co. (NYSE: MON) from Buy to Neutral.
• Merrill Lynch upgraded BP (NYSE: BP) from Underperform to Neutral.

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Filed under: Deals, Google (GOOG), Cisco Systems (CSCO)

Venture capitalists (VCs) are supposed to take the long view of things. Even fast-growing companies like Cisco (NASDAQ: CSCO) and Google (NASDAQ: GOOG) can take awhile to get traction. Of course, it’s worth the wait as the returns can be staggering.

But there’s now a big problem for VCs: even if their portfolio companies are doing well, there are few opportunities to cash out. Simply put, the key exit markets - IPOs and mergers & acquisitions - are in deep freeze.

Just take a look at the latest statistics from Dow Jones VentureSource. For Q3, VCs got only $4.75 billion in exits from IPOs and M&A deals. This represents a 66% plunge from the same period a year ago.

Interestingly enough, the only VC-backed company to go public in Q3 was Rackspace Hosting (NASDAQ: RAX), and this deal was fairly lackluster.

In fact, at the current pace, it appears that this year will be the worst for IPOs and M&A deals - that is, since the dot-com bust.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

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Filed under: Google (GOOG)

Shares in Google Inc. (NASDAQ: GOOG) went on a wild ride late yesterday. By some reports, the stock fell as low as $25 per share just before the close of trading. Other sources say it went to penny!

Either the company is in far worse shape than anyone realized or something isn’t quite right at NASDAQ.

Of course, the stock wasn’t really in that much trouble. It turns out that a trader sent an unusually large number of orders at 3:57 pm, and this caused the stock price to move wildly, both high and low. A NASDAQ spokesman said, “A market participant sent in a large number of orders and drove the price down at approximately [3:57 p.m. ET] which caused the bid-offer to be artificially low due to their mistake.”

Was it a mistake or a diabolical plot? No word on the trader’s motivation. But all trades above $425.29 and below $400.25 will be canceled. The stock’s closing price was reset to $400.52.

Not everyone seems to have gotten the message though. Today, at 2 pm, Google is trading at $413.35. Google Finance shows this as a 3.3% gain on the day. However, other sites show the same price but report the gain at nearly 30%. I assume that will adjusted too.

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Filed under: Consumer experience, Google (GOOG)

When T-Mobile USA and Google, Inc. (NASDAQ: GOOG) announced the Google-powered G1 smartphone last week, little did the fourth-largest wireless provider in the U.S. know that it would have to turn customers away.

Anxious customers who want to sign up for the new phone when it’s released on October 22nd are apparently getting this message on T-Mobile’s website: “Sorry! Due to the overwhelming popularity of the new T-Mobile G1, upgrades are temporarily unavailable. Please try again later.” This news is according to the Android Guys blog, which guesses that the Google G1 sold out in four days.

T-Mobile has neither confirmed nor denied that the Google G1 sold out, nor has it released initial sales figures for the still-unreleased smartphone. The G1 is a clear competitor to the Apple, Inc. (NASDAQ: AAPL) iPhone 3G and to the various BlackBerry and Windows Mobile smartphones. It’s also poised to become a huge seller for T-Mobile as more and more touchscreen competitors try to steal some of Apple’s thunder.

With the G1 selling for $179.99 with a two-year contract, it’s priced $20 lower than Apple’s offering. It’s over a year behind Apple, though. Sometimes first-mover advantage can be everything — and Google is not used to being in the position of playing catch-up.

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