by James Brumley | October 11, 2012 12:58 pm
Brace yourself for an unthinkable (and potentially earth-shattering) idea:
Google (NASDAQ:GOOG) doesn’t walk on water anymore.
Five years ago, the idea would have been unthinkable. Now … well, it’s still relatively unthinkable, but only because investors have become so used to things being a certain way that it’s tough to imagine anything else. Change happens, though, and often when we least expect it.
There’s little doubt that merely positing the idea will enrage Google die-hards. Before anyone from that camp overreacts, however, take a deep breath and re-read the theory.
It’s not suggesting Google is no longer the king of web search, and therefore no longer the king of online advertising. It’s just suggesting that Google has been demoted from “great” to just “good.” However, that means investor expectations need to be adjusted accordingly.
The suggestion that Google is losing its luster isn’t based on one monumental setback. Rather, it’s based on a lengthening string of little things that — in sum — paints a bigger picture. Those little telling stumbles include:
Any one of these stumbling blocks by themselves might be dismissible as bad luck. But when you see all of them materialize around the same time — along with a slew of other nagging headaches — a bigger picture starts to get painted.
There are a few different ways to say it, but there’s just one overarching theme in play here: Google has become a big, bureaucratic machine, and made it completely possible for its employees to focus on their projects without keeping in mind that the whole point of running a business is to make an ever-growing amount money.
Don’t misunderstand. Google is profitable, and will be profitable for the foreseeable future. It’s a victim of its own success, though … growing so big that it’s no longer run like a startup. The problem is, that startup mentality is the only thing that made Google truly great in the first place, as it was more proactive than reactive then.
Google’s unwieldy size also is a big reason why its acquisitions don’t seem to help much anymore.
For instance, the acquisition of YouTube and SketchUp in 2006 really meant something for the top and bottom line. Bringing DoubleClick into the fold in 2007 meant something, too. More recently, the acquisitions seems to be reiterations of prior acquisition, or relatively unhelpful. The pick-up of Motorola Mobility in late 2011, for instance, should have been a game-changer. Now it’s not all that clear whether the company has an idea of how to fully leverage the acquisition.
Bottom line? Google looks like it’s on its way to becoming the typical all-American big company.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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