A top engineer, Google Inc. (NASDAQ: GOOG) honcho Eric Schmidt was able to rise through the corporate ranks at Sun Microsystems and then move over to Novell to become CEO. But it was a tough stint because of the onslaught of Microsoft (NASDAQ: MSFT). Then again, some of the best lessons come from failure.
Of course, in 2001 Schmidt became the CEO of a scrappy company with the clever name “Google.” He somehow managed the free-wheeling genius of its founders, Larry Page and Sergey Brin, and grew the tech stock’s business from $100 million to $30 billion in revenue.
Now Schmidt has stepped down as CEO and Page has taken the top spot. In fact, he has already made changes, such as allowing for more openness and encouraging a start-up atmosphere. But can Google return to its glory days and give shareholders something to cheer about? Here’s a look at the pros and cons for GOOG stock.
Pros for Google Stock
A juicy business. When it comes to Internet search, Google is the dominant global player. Through its sophisticated AdWords and AdSense platforms, the company’s highly scalable business continues to capture a larger share of the advertising market. It helps that the advertisements are cost-effective, relevant and measurable. And as the economy improves, the ad budgets will expand.
M&A savvy. Over the years, Google has made some strategic deals. The purchase of YouTube made the company a dominant player in short-form video. Google Maps was also the result of a savvy acquisition. Although, perhaps the most notable deal was for Android. Because of this, Google has become one of the top players in the mobile space (another helpful deal was the acquisition of AdMob, which is a mobile advertising network). With $33 billion in the bank, there is certainly enough resources to pull off many more deals.
Office killer? Google has developed an impressive suite of productivity applications, such as for email, word processing and spreadsheets. They are cloud-based and affordable. More importantly, they may be a threat to Microsoft’s Office franchise, which generates nearly $12 billion in annual operating income.