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Google Surpasses $1,000 for First Time on Ad Optimism

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Google Inc. (GOOG) reached $1,000 for the first time amid optimism about new advertising for wireless devices and online video, joining a small club of U.S. stocks.

The world’s largest search-engine company gained 14 percent to a record $1,011.41 at the close in New York. The stock, sold at $85 in a 2004 initial public offering, has risen every year since except for 2010 and 2008, when it slumped 56 percent during the recession.

Google is stepping up investments to boost capacity and introduce services that encourage marketers to direct more spending toward wireless devices. Photographer: Krisztian Bocsi/Bloomberg

Oct. 18 (Bloomberg) –- First there were the Googles and Yahoos of the world, and now, there’s Blippex. Based in Berlin, the new search engine ranks results by time people spend on a page — and it doesn’t collect personal information. Bloomberg Television spoke to the Blippex founder. (Source: Bloomberg)

The Internet company is benefiting from ads for new formats after expanding beyond delivering advertisements alongside search results on desktop computers. Google should take 33 percent of the global online-advertising market this year, up from 31 percent in 2012, according to EMarketer Inc.

“It’s not complicated,” said Martin Pyykkonen, an analyst at Wedge Partners Corp. in Greenwood Village, Colorado. “This is a story that is a proven business model. The bottom line is this is a great growth stock.”

Google, based in Mountain View, California, already has one of the highest market capitalizations in the U.S. at about $330 billion, trailing only Apple Inc. (AAPL) and Exxon Mobil Corp. Among the few companies with a stock price above $1,000 are online-travel company Priceline.com Inc. and Seaboard Corp., a producer of turkey and hog with a market value of just $3 billion.

A majority of analysts are predicting further stock gains for Google, with 35 recommending to buy the shares and 13 advising to hold them, data compiled by Bloomberg shows. None has a sell rating. Google is trading at a price-to-earnings ratio of 28, the data show, lower than Facebook Inc.’s (FB) 237 and Yahoo Inc.’s 29.

Ad-Price Drop

The stock jumped today after Google reported third-quarter sales and profit that beat estimates yesterday.

As the company navigates a shift to mobile promotions from pricier search-based ads on desktops, it is relying on a simple maxim: volume, not just price. Last quarter, the volume of clicks on advertisements climbed at the fastest pace this year, compensating for a drop in average-ad prices.

“As long as we continue to see that higher-than-expected volume coupled with the lower pricing, I’m OK with it,” said Josh Olson, an analyst at Edward Jones & Co., who rates the stock a buy. “It just signals they have good demand for that mobile business.”

Google also stepped up investments to boost capacity and introduce services that encourage marketers to direct more spending toward wireless devices.

Volume Gains

Third-quarter revenue, excluding sales passed on to partner sites, was $11.92 billion, exceeding the average projection for $11.64 billion, according to estimates compiled by Bloomberg.

Profit excluding certain items was $10.74 a share, topping the average projection of $10.36. Net income jumped 36 percent to $2.97 billion from the year-earlier period.

“They continue to grow — for a company this size, very solid growth, still very profitable despite all the investments they’re making,” said Colin Sebastian, an analyst at Robert W. Baird & Co. who rates the stock the equivalent of a buy.

The push to boost volumes — which rose 23 percent in the second quarter and 20 percent in the first — took its toll on Google’s gross profit margin, which shrank to 56.9 percent, the lowest level this year, based on data compiled by Bloomberg.

The search provider has been working to address falling prices. This year, it introduced an advertising service called “enhanced campaigns,” encouraging marketers to funnel more of their spending to wireless devices.

Ad Initiatives

Google is expanding its advertising in other ways, including working with direct rivals such as Facebook. Customers of its DoubleClick Bid Manager, which helps companies quickly buy ads across the Internet, will soon get access to the Facebook Exchange, Google said today. The feature, available to Google clients in the next few months, will let marketers target Facebook users based on their browsing.

The campaigns and other initiatives should help average ad prices recover in the next year or so, according to Victor Anthony, an analyst at Topeka Capital Markets Inc.

“The results clearly demonstrate that Google remains kind of the best of breed, best of class in the online advertising space, really within the Internet space itself,” Anthony said.

Revenue at Google’s sites, including the search page and YouTube, expanded 22 percent, faster than the 18 percent in the previous quarter.

Ad Growth

“My goal was to ensure that Google maintains the passion and soul of the startup as we grow,” Chief Executive Officer Larry Page said in a call with analysts yesterday. “That’s why I worked so hard to increase the velocity and execution.”

Page, who became CEO in 2011, said that he won’t join every earnings call in the future, citing a need to prioritize his time. The co-founder last missed a call in July 2012 after he lost his voice, which forced him to miss other company events as well. In May, Page disclosed a health condition resulting in hoarse speech and labored breathing, noting that it wouldn’t impede him from running the company.

Google is making other changes. Earlier this month, the search provider said it would update its marketing rules to allow users’ names and photos to be used in more promotions.

The company and Facebook are taking market share from Yahoo, which earlier this week reported a decline in revenue, while profit was bolstered by the Web portal’s stake in China’s Alibaba Group Holding Ltd.

Google is pushing for better results in other areas, including in hardware. Its Motorola mobile unit, which the company bought last year in its biggest acquisition ever, announced a flagship Moto X smartphone in August, an effort to boost sagging market share. Revenue in the division declined 34 percent to $1.18 billion.

“Google has a lot of things going for it,” said Sameet Sinha, an analyst at B. Riley & Co, who rates the stock a buy and doesn’t own it. “Google has its fingers in every pie.”

source: http://www.bloomberg.com/news/2013-10-18/google-surpasses-1-000-for-first-time-on-optimism-for-new-ads.html

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Industry

THE FINTECH REVOLUTION IN INSURANCE

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Advancing technology has collided with longstanding customer issues to create a series of deep, lasting, systemic challenges for insurance. How will these trends impact insurers’ businesses and the industry overall?

The rise of fintech, changing consumer behavior, and advanced technologies are disrupting the insurance industry. Additionally, Insurtechs and technology startups continue to redefine customer experience through innovations such as risk-free underwriting, on-the-spot purchasing, activation, and claims processing.

The report from Deloitte Global examines forces that are disrupting the insurance industry and presents four possible scenarios for the future. We explore:

  • Changing the channel: Partnerships with product makers and distributors, and embedding insurance into other products and services may enable customers to select products that best fit their lifestyle.
  • Underwriting by machine: Technology advancements including AI innovations and algorithms will likely individualize risk selection and pricing, and customers can select products based on a wider range of price points.
  • Rise of the flexible product: Time-flexible, event-driven, modular and adjustable coverage may evolve to accommodate life stage, lifestyle, and wellness changes among consumers.
  • E-Z life insurance: Given the growth and shopping patterns in emerging markets, insurers who introduce flexible term products, and master digital distribution without compromising underwriting are likely to win in the marketplace.

Read the report to understand what the future holds for the insurance industry.

Key Contact

Neal Baumann

Neal Baumann

Global Insurance Leader

Neal leads Deloitte’s Global Insurance practice and is the US insurance consulting leader. He has 20 years of experience advising financial services and insurance company clients on corporate and comp… More

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Business

EUROPEAN INVESTMENT BANK RUNS BLOCKCHAIN HACKATHON

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A team from EY triumphed in a 48-hour European Investment Bank (EIB) hackathon designed to find ways to use blockchain technologies to redesign the transaction processing of commercial paper.

The EIB brought together 56 coders from 15 countries in 12 teams for the hackathon, run alongside the bank’s annual forum dedicated to treasury issues.

While the conference was running, the coders were locked in an adjacent room, trying to prove that blockchain tech can improve the transaction process of commercial paper – a short-term financing instrument that is used worldwide in treasury operations and still relies on an ‘archaic’ and complex process.

In the pitching session, the EY team won the contest with an effort that taps a combination of blockchain, robotics and business AI tools to optimise the issuance process and reduce the number of exchanges between the EIB and its counterparties while maintaining each one’s role within the ecosystem.

The EY team won a EUR5000 cash prize and a contract with the EIB to further develop its solution into a proof of concept.

Alexander Stubb, vice president, EIB, say: “There will be major gains from the use of new technologies such as blockchain, generated from the simplification and streamlining of existing financial processes. The new perspectives opened up by digitalisation and Distributed Ledger Technology must be assessed and we must all be ready to make use of them and embark on this new venture.

“As the EU’s financial arm, we decided to be on the active side, learn by experience and make things happen, to be a facilitator and join with our banking partners to pave the way for tomorrow’s financial industry.”

Separately, Barclays is planning a hackathon that will see coders use blockchain technology for post-trade processing of derivatives contracts. The event will take place over two days in September in London and New York, according to Coindesk.

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Industry

GOOGLE NEVER REALLY LEFT CHINA: A LOOK AT THE CHINESE WEBSITE GOOGLE’S BEEN QUIETLY RUNNING

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More information is leaking out about just how Google is planning to re-enter the Chinese market with a mobile search engine application that complies to the country’s censorship laws.

The Intercept first broke this story when a whistleblower provided them documentation detailing the secret censored search project (codenamed Dragonfly). According to them, an overlooked Google acquisition from 2008 — 265.com — has been quietly laying down the foundation for the endeavor.

In order to run a business in China, tech companies are required to obtain a Internet Content Provider license from the Chinese government. As it’s difficult for foreign businesses to obtain this license, Google has long partnered with Chinese IT company Ganji.com. Back in the early years of Google.cn, Google actually operated directly off of Ganji.com’s license, even claiming the Chinese company was temporarily running its search engine. Facing intense scrutiny from the Chinese government and the media over this license arrangement, in 2007 Google formed a legitimate joint venture company with Ganji.com — the Beijing Guxiang Information and Technology Co.

Because of the necessity of that license, Google has maintained that joint venture and has been operating in China under the name Beijing Guxiang Information and Technology Co. ever since. Even after the shut down of Google.cn, Google’s Chinese advertising enterprise has been operating under the joint venture company as well as, low and behold, 265.com. A whois search of the 265.com domain name, which provides a record of the current domain registrant information, pulls up Beijing Guxiang Information and Technology Co. as the registrant organization.

A significant number of Google employees are reportedly none too happy about Google’s project complying with Chinese censorship laws. This most recent news, that the company has long been collecting data for a moment just like this, surely won’t make morale among these workers any better.

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