Andreas Weege

Alexander Ruijs
Ashim Kayastha
Sorasak Silanont
Industry overview
INDUSTRY OVERVIEW
 Information industry (internet)
 Search engine websites (direct competitors)
 Google, Yahoo, Baidu, Bing, AOL etc
 Social Network (indirect competitors)
 Facebook, Twitter, My space etc.

 Source of revenue – online advertising

 SEARCH ENGINE TREND

http://marketshare.hitslink.com/search-engine-market-share.aspx?qprid=5
Competitors overview
COMPETITOR OVERVIEW
 The Competitor “Yahoo!”

 David Filo and Jerry Yang

 integrated consumer experiences,
 applications (communications and communities),
 search,
 media products & solutions,
 Mobile

 More than 30 Languages, 25 Countries

 CSR Global Green, home energy use
COMPETITOR OVERVIEW
 Yahoo!’s Strategy

 Social Network
 user life experience and emotions,
 connect people,
 passions,
 Communities

 Knowledge and Information

 Statement:
 Yahoo! : To connect people to their passions, communities, and the world’s
knowledge.
 Google : To organize the world’s information and make it universally accessible and
useful.
COMPETITOR OVERVIEW
 Yahoo!’s Strategy

 Yahoo! : Providing knowledge obtained via personal experience, association, awareness

and understanding.
 Answers,
 Del.icio.us,
 Flickr,
 Inclusion

 Google : Providing information obtained via investigation, study, data, measurement and
numerical quantities.
 PageRank,
 Algortihm,
 Link Measurement,
 Profiling

 Yahoo! : To connect people to their passions, communities, and the world’s knowledge.
 Google : To organize the world’s information and make it universally accessible and useful.
COMPETITORS MARKET SHARE
Company Background
GOOGLE BACKGROUND
 Google co-founder
Founded 1998
IPO 2004
Key People
Chairman and CEO
Eric E. Schmidt
Director; President, Technology
Sergey Brin
Rankings
#102 in FORTUNE 500
S&P 500
Dow Jones Global Titans
#30 in FT Global 500
Google is considered to be among the top 10 brands in the U.S.
SELECTED OPERATIONS AND
PRODUCTS
 Advertising programs
 Ad Sense (network ad program for online publishers)

 Ad Words (text-based ad placement for advertisers)

 DoubleClick (digital marketing technology and services)

 Internet search and content

 Google Alerts (news and search e-mail alerts)

 Google Answers (fee-based expert help)

 Google Catalogs (searchable mail-order catalogs)

 Google Earth (3-D satellite imagery)

 Google Groups (message boards)

 Google Image Search

 Google Labs (online services research and development)

 Google Local (localized search)

 Google Mobile (wireless device content)

 Google News

 Google Product Search (comparison shopping)

 Google Scholar (academic materials search)

 Google Video

 Google Web Directory

 Google Web Search

SELECTED OPERATIONS AND
PRODUCTS
 YouTube
 Tools and applications

 Android (mobile operating system)

 Blogger (blogging tools)

 Gmail (Web-based e-mail)

 Google Analytics (Web traffic measurement)

 Google Chrome (Web browser)

 Google Desktop Search

 Google Language Tools (translation tools)

 Google Talk (instant messaging)

 Google Toolbar (browser plug-in application)

 Nexus One (smart phone)

 Picasa (digital photo organization and sharing)

GOOGLE PHILOSOPHY
TEN THINGS WE KNOW TO BE TRUE
1. Focus on the user and all else will follow
2. It’s best to do one thing really, really well.
3. Fast is better than slow.
4. Democracy on the web works.
5. You don’t need to be at your desk to need an answer.
6. You can make money without doing evil.
7. There’s always more information out there.
8. The need for information crosses all borders.
9. You can be serious without a suit.
10. Great just isn’t good enough.
Competitive Position- Porter’s five forces
PORTER’S ANALYSIS

http://mostpopularwebsites.net/
 Google
Resources and Sustained Competitive Advantage
Difficult Without
Valuable Rare Implications
Resources to imitate Substitutes
Temporary competitive
Best search engine Yes Yes Yes No advantage
Leader in Online Temporary competitive
Advertising
Yes Yes Yes No advantage
Sustainable competitive
Brand name Yes Yes Yes Yes advantage
Mobile Platform Temporary competitive
Ads
No Yes Yes No advantage
Google
Applications and Yes No Yes No Competitive parity
Licensing
Temporary competitive
Online Video Yes Yes Yes No advantage
Financial analysis
GOOGLE STOCK PRICE
 Dec. 3, 2010: price 589.17
 Aug. 20, 2004: price 100.01

 2004: IPO $23 billion, value at $1.5 billion

 2010: $180 billion
 Top 7 Internet Information Provider
Company Symbol Price Change Market Cap P/E
Google Inc. GOOG 564.35 0.00% 180.47B 22.93
Baidu, Inc. BIDU 106.81 0.00% 37.21B 89.01
Info Edge (India) Ltd. NAUKRI.BO 650  0.93% 35.48B 68.14
Yahoo! Inc. YHOO 16.15 0.00% 21.05B 20.97
Geodesic Ltd GEODLTD.BO 118  2.21% 10.79B 3.99
Akamai Technologies Inc. AKAM 53.36 0.00% 9.73B 63.22
 Google Inc. VS Industry Leaders
Statistic Industry Leader Google Rank
Market Capitalization GOOG 180.47B - 1
P/E Ratio (ttm) BIDU 89.01 22.93 18
PEG Ratio INSP 29.04 1.11 14
Revenue Growth CRIC 104.10% 22.60% 17
EPS Growth (Qtrly YoY) FPG.PA 2121.20% 31.10% 16
Long-Term Growth Rate BIDU 63.02% 17.32% 18
Return on Equity (ttm) VTRO 111.49% 20.61% 1
Long-Term Debt/Equity - 4.902 N/A
Dividend Yield (annual) TSCM 3.80% N/A N/A
 Cash Flow Statement, Google, Inc
Period Ending 12/31/2009 12/31/2008 12/31/2007
Net Income 6,520,448   4,226,858   4,203,720  
Operating Activities, Cash Flows Provided By or Used In
Depreciation 1,524,308   1,499,887   967,658  
Adjustments To Net Income 785,455   1,798,880   285,487  
Changes In Accounts Receivables $ (504,039) $ (334,464) $ (837,247)
Changes In Liabilities 510,515   182,801   709,679  
Changes In Inventories -  -  - 
Changes In Other Operating Activities 479,511   478,895   446,113  
Total Cash Flow From Operating Activities 9,316,198   7,852,857   5,775,410  
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures $ (809,888) $ (2,358,461) $ (2,402,840)
Investments $ (7,101,293) 359,338   $ (372,098)
Other Cash flows from Investing Activities $ (108,024) $ (3,320,299) $ (906,651)
Total Cash Flows From Investing Activities $ (8,019,205) $ (5,319,422) $ (3,681,589)
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid -  -  - 
Sale Purchase of Stock -  $ (71,521) 23,861  
Net Borrowings -  -  - 
Other Cash Flows from Financing Activities 143,141   159,088   379,206  
Total Cash Flows From Financing Activities 233,412   87,567   403,067  
Effect Of Exchange Rate Changes 10,511   $ (45,923) 40,034  
Change In Cash and Cash Equivalents $1,540,916   $2,575,079   $ 2,536,922
BALANCE SHEET
 Little or no short-term debt
 No long-term debt

 Funds of equity

 Assets in cash and investments

 Flexibility

 Cash flow
INCOME STATEMENT
 Corporate tax rate: 35%
 For Google: 20-25%

 Profit margin: 20-30%

 Revenue 2008-2009: 8.5% increase

 EBIT 2008-2009: 43% increase

INCOME STATEMENT
 Google R&D, 2009-2010: 29% increase
 Yahoo R&D, 2008-2009: 1% decrease

 Google G&A, 2009-2010: 17% increase

 Yahoo G&A, 2008-2009: 20% decrease

 Google marketing 2009-2010: 35% increase

 Financial Ratios, Google, Inc.
Period 2010 2009 2008 2007
Liquidity Ratios
Current - 10.61x 8.89x 8.49x
Assest Management
Fixed assets turnover - 2.09x 1.88x 2.06x
Total assets turnover - 0.58x 0.69x 0.63x
Debt Management
Debt ratio - 11.09% 11.11% 10.44%
Times-interest-earn - 4.50x 3.60x 3.86x
Profitability
Profit margin 28.80% 27.57% 19.39% 25.33%
Return on assets 13.57% 16.10% 13.31% 16.59%
Return on equity 20.61% 18.11% 14.97% 18.53%
Market Value
Period As of Dec. 2,2010
Market Cap 180.47B
Price/Earning 22.93x
Price/Book Value 4.17x
Book Value/Share $113.20
GOOGLE’S PERFORMANCE
GOOGLE’S FINANCIAL MANAGEMENT
Recommendation
RECOMMENDATION
 Short Term
 Incooperate the advertisements throughout all products
 Train Business Mindset throughout the talented work force

 Middle Term
 Interconnect the products under the Google Brand using
social network approach
 Create premium content revenue through other incomes than
ads (e.g. premium user subscription)
 Discontinue not strategy fitting products

 Long Term
 Keepconsistent to the 10 things we know to be true
 Make the subsidiaries financial undependable
Question and Answers
THANK YOU