Posts Tagged ‘Google’

Google (GOOG) at war with China

By: ispeculatornew | Date posted: 03.23.2010 (4:00 am)

There had been speculation about an outcome for several weeks now ever since Google (GOOG) had announced its intention to stop filtering search results. And finally it happened today, Google took drastic action basically taking action against the Chinese government. It took the step of redirecting all traffic from its Chinese website, to its Hong Kong operations. There users can find an unfiltered search engine in their language. This is a direct attack towards the Chinese government and it did not take much time to generate reactions:

-“This move is totally wrong” – Xinhua (Chinese official news agency).

-“They stressed that foreign companies in China should abide by Chinese laws, and if Google is willing to abide by Chinese laws, we continue to welcome it operating and developing in China. If Google insists on dismantling the search service of its Chinese website, that is Google’s own affair. But it must follow Chinese law and international custom, and responsibly handle the aftermath.” – Chinese Official

Google carefully explained its decision on its own blog. This was not a mistake, not an error, it was a carefully planned move, that had been discussed with the US government with even Barack Obama being kept informed about the process that led to this outcome. What’s most clear is that this is a bold move. No matter how powerful Google might be (and it clearly is very much so), this is a bold move that could have massive implications for internet users in China as well as all companies involved in the Chinese market.

It is an interesting strategy because it is not illegal. The Chinese website owned by Google does not display unfiltered results, which would have made it easy for Beijing to kick out the internet giant. But let’s face it, the result is the same and the ball is now in China’s camp. It can now either block Google and deal with internal problems or a less likely scenario would be for China to now compromise or be more flexible with Google. How likely is that to happen? I’d say almost impossible. China considers itself a world power and surely hates to see Google challenge its power right now.

The winner?

Of course Baidu right now is looking like a very bright star. There is no doubt that the Chinese government will be on Baidu’s side in the near future. I had been hesitant to take a position on Baidu but I’m getting more comfortable with the idea and might become even more so when it becomes more clear how the Chinese government will react to Google’s recent challenge…

Facebook IPO, will you be a buyer?

By: ispeculatornew | Date posted: 11.27.2009 (5:00 am)

icon_facebookFacebook has been one of the most valuable internet properties for a few years now and it just seems to be getting more valuable every year. Like many others, I was very curious to see how the company would be able to generate cash flows from its tens of millions of users but it has continued to show an ability to innovate and remain ahead of its competitors. There has been a lot of discussion about the company’s value, in large part because some companies bought major stakes in Facebook and will of course be looking to make a profit off of its investment

Also, as we had discussed last week, there are a few shares being traded, although not in large quantity. These are done off the market and generally sold by investors or employees that want to cash in immediately without waiting for the company to do its much anticipated IPO.

Who currently owns Facebook???

The more known investor is of course giant Microsoft(MSFT) who beat out a good number of interested buyers that included Google(GOOG). When it invested (2007), it valued Facebook at $15 billion. Since then, Russian company Digital Sky Technologies invested $300 million (mostly valuing Facebook at $10 billion, which to be expected after the stock market crash last year).

Facebook valuation?

But really, what is Facebook’s value?? There is a lot of debate but considering the role that social networks might play in the future but as they become more important to the life of internet users, there is no doubt that there is money to be made. The real question lies in what the exact sources will be. Advertising and digital products & services have been the initial revenue sources for most of these networks. I actually thought this valuation analysis done by TechCrunch is one of the better ways of evaluating the company.

IPO in the works?

ita0918_ph090917_310And yes, there continue to be signs that the IPO is is coming very soon. The most recent sign came when Facebook announced a two-tiered share structure. This is usually used to give less power to new investors. Think about it for a second. If found Mark Zuckerberg would like to keep control of the company, he can simply give more power to the shares that he owns, and less to the ones that will be sold to the general public…  But to most investors, it does not make a difference anyway as there is not much power in holding a few hundred shares of a public company:) Google had done the same move prior to its IPO in 2004.

But as long as they do not need the funds, chances are that they will remain private. Says Zuckerberg. “It’s something we’ll do when we’re ready for it. It’s something we don’t see on the immediate horizon.”  The main advantage to going public is getting a large amount of funds that can be used to fuel growth. But that comes with more owners to answer to and a lot more regulations and accounting rules to follow.

Of course, as in any other investment, I would be a buyer of Facebook shares depending on its valuation, but given all of the hype, I would be very reluctant to go short on Facebook, even with a high valuation, at least for the initial few months.