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Google may be a good place to work, but lately it hasn't been a good place to invest. 2014 has been a bad year for shareholders.
Google shares have fallen almost 10% in 2014 and they're near their 52-week low.
Obviously, its CEO Larry Page cannot be very happy with the situation, especially considering how well the competition has done this year:
1. The competition is getting tougher in all fields:
2. Risky acquisitions:
Google has made several acquisitions this year that could increase its revenue streams beyond advertising, but which to average investors may seem like strange and risky bets.
These acquisitions could turn out to be a very smart move down the road, but the deals also reinforce Google's idea as a company willing to throw a lot of spaghetti on the wall to see which one sticks.
For example, the purchase of Motorola Mobility It didn't pay off in 2012, and earlier this year Google sold a significant chunk of Motorola to Chinese hardware giant Lenovo for a fraction of what it paid just two years ago.
These types of transactions can be a problem when shareholders are more focused on short-term profits than long-term strategic planning.
3. Could it be an overreaction?
Google has been through this before. Shareholders were skeptical of previous deals such as YouTube or the DoubleClick advertising network; acquisitions that have certainly paid off.
The company remains the undisputed leader in the field of online advertising, despite having lost some market share.
AND you are not in a difficult financial situation eitherGoogle has $ 62.2 billion in cash and analysts are forecasting sales and earnings per share to grow 18% in 2020, which is pretty impressive for a company the size of Google.
Despite all this, at the moment the value of the stock is trading for just 17 times the earnings forecast for 2020. That is, a little cheaper than Microsoft and considerably less than Facebook and Yahoo.
That's why Brian Wieser, an analyst at Pivotal Research, recommended "Buy" Google shares on Wednesday, though he acknowledged that Google would be better off "focusing on advertising and limiting its diversification efforts to the private investment options of its executives."
However, investors are treating Google as if it were just one more in the field of online advertising, despite being the undisputed market leader. Perhaps all the negative things about Google have already been factored into the share price.
Ramón Pedreño addresses the same issue in his blog Investment and Finance: What's wrong with Google?
The original story appeared in the Money Section of CNN.com: http://money.cnn.com/2014/12/18/investing/google-stock/index.html