Does this income statement make me look fat?
Dot-com darlings ... they grow up so fast. Google
Silly Google. There was a time when the company would warn of increased expenses, and it didn't matter. Whether Google was bankrolling new features or expanding its campus, the scalable model was more than enough to work that weight right off. But as the company's fourth quarter shows, if it pigs out these days, the girth goes right to its thighs.
Did Google's stock deserve to take a hit on Friday after missing Wall Street's profit targets? Absolutely. Is it a buying opportunity? I think so. Keep in mind that this isn't Yahoo!
If Google's top line is humming along nicely, all it needs to do is be more vigilant on its expenses. And getting a handle on expenses is a better problem to deal with than a lack of revenue, which has proved to be a tough problem to tackle organically.
So get on that treadmill, Google. Remind us of the svelte sprinter you used to be.
Briefly in the news
And now, let's take a quick look at some of the other stories that shaped our week.
- The Federal Reserve lowered interest rates again. Hooray! We're now just 300 basis points from zero.
agreed to acquire Audible (Nasdaq: AMZN) for $11.50 a share. It's a great deal, but not necessarily for Audible shareholders. Wasn't the digital-audiobook company starting to get its act together? Margins were improving, its subscriber base was growing, and its cash-rich balance sheet was built to weather the near-term storm. I'm guessing that Amazon went all Don Corleone on Audible. No horse head in the bed, but perhaps a thinly veiled threat that Amazon was going to jump into Audible's niche, with or without its help. That would have made for an offer Audible couldn't refuse. (Nasdaq: ADBL)
- In a widely telegraphed move, eBay
reworked the fee structure at its namesake auction site. It lowered listing fees, but it also jacked up final merchandise-value fees on successful auctions. eBay argues that it's aligning its efforts with those of the sellers. Really? By charging them more when they're successful? By rewarding the auctions that don't attract interest with lower insertion fees? No wonder CEO Meg Whitman is leaving. (Nasdaq: EBAY)
- Are tech-branded stores no longer cool? In a week when Palm closed up most of its namesake retail smartphone stores and Dell shuttered its computing kiosks, that would seem to be the case. Then again, maybe it's the specific brands that are no longer cool. You don't see Apple
retreating as a mall tenant, recent share-price slide notwithstanding. (Nasdaq: AAPL)
Until next week, I remain,