A BRIEF ANALYSIS OF ALPHABET INC. (GOOG)

BUSINESS

Alphabet Inc. is a holding company which are organized around 6 areas of activities: the largest of which is Google. Google is divided in two segments, Google Services and Google Cloud; they also report all non-Google businesses collectively as Other Bets. YouTube provides people with entertainment, information, and opportunities to learn something new. And Google Assistant offers the best way to get things done seamlessly across different devices, providing intelligent help throughout a person's day, no matter where they are. To achieve their objective goal Google are continually innovating and building new product features that will help their users, partners, customers, and communities. Google have invested more than $100 billion in R&D over the last five years.
 
Other Bets also remain focused on innovation through technology that can positively affect people's lives. For instance, Waymo is working toward making transportation safer and easier for everyone and Verily is developing tools and platforms to improve health outcome. Nest Labs is develops and production of home automation solutions: Wi-Fi networks synchronized with the control programs for thermostats, smoke detectors and security systems; while Google X research into artificial intelligence.
Google Ventures an investment services: management of an investment fund devoted to young businesses that operate in the new technology sector and Goggle capital an investment fund intended for already developed companies. Google Fiber focuses  on fiber optic internet access network infrastructure. The company was founded in 1998 and is headquartered in Mountain View, California.

BRANDS

Google’s intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services, and brands as well as affect our ability to compete.

KEY DATA

GOOG- STOCK PRICE FLUCTUATIONS [2017- SYS.DATE]

MONTHLY HISTORICAL STOCK PRICE

HOW WAS
THE LAST 1000 TRADING DAYS
OF GOOGLE'S STOCK PRICE DISTRIBUTION 

Currenly stock price as first February 2023 is at the red arrow, which is $99. Base of the histogram distrubution this price is at the second lowest price range since 2018. Most of the Googles stock price is distributed at a range of $60 to $70.

When I summurized is further, we observe as follows:
median Google's stock price at $112, which is 12 % greater than currently price.

COMPARING STOCK PRICE FLUCTUATION 
RED LINE SINCE: 2019- DECEMBER 2022
&
BLACK LINE SINCE JANUARY 2022

HOW WAS GOOGLE'S 
MONTHLY 
RETURN ON INVESTMENT (ROI)

We notice that 2022 was the worst year for Google so does for technology sector as a whole.

HOW DOES GOOGLE MAKE MONEY  ?

​Google have built world-class advertising technologies for advertisers, agencies, and publishers to power their digital marketing businesses. Their advertising solutions help millions of companies grow their businesses through Google’s wide range of products across devices and formats, and they aim to ensure positive user experiences by serving the right ads at the right time and by building deep partnerships with brands and agencies.
Google Services generates revenues primarily by delivering both performance and brand advertising that appears on Google Search & other properties, YouTube and Google Network partners' properties ("Google Network properties"). This means in practice.

• Performance advertising creates and delivers relevant ads that users will click on, leading to direct engagement with advertisers. Performance advertising lets their advertisers connect with users while driving measurable results. Google ads tools allow performance advertisers to create simple text-based ads.
• Brand advertising helps enhance users' awareness of and affinity for advertisers' products and services, through videos, text, images, and other interactive ads that run across various devices. They help brand advertisers deliver digital videos and other types of ads to specific audiences for their brand-building marketing campaigns.
• Google Cloud Google is a company built in the cloud. Google Cloud Platform generates revenues from infrastructure, platform, and other services.
  • Google Workspace generates revenues from cloud-based collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar and Meet.

Their cloud services are generally provided on either a consumption or subscription basis and may have contract terms longer than a year.

GOOGLE'S Historical Income Statement

​Google’s compound annual average growth rate since 2012 is astonishing of 19.9 %. Continuously present in the international market operations are growing significant to Google’s revenues and net income. International revenues accounted for approximately 54% of our consolidated revenues in 2021.

SOURCES OF REVENUES:
BREAKING DOWN SALES PER BUSINESS

​the most important revenue provider. Google services operating income increased $37.2 billion from 2020 to 2021. The increase was due to growth in revenues partially offset by increases in TAC, content acquisition costs, compensation expenses, advertising and promotional expenses, and charges related to certain legal matters.

FROM WHICH PART OF THE WORLD
​DOES GOOGLE GENERATE IT'S REVENUE ?

Net sales are distributed geographically as follows: the United States (45.8%), Americas (5.6%), Europe/Middle East/Africa (30.7%) and Asia/Pacific (17.9%).

GOOGLE'S COMPETITORS

Google  business is characterized by rapid change as well as new and disruptive technologies. They face formidable competition in every aspect of their business, including from:
General purpose search engines and information services, such as Baidu, Microsoft's Bing, Naver, Seznam, Yahoo, and Yandex.
Vertical search engines and e-commerce providers, such as Amazon and eBay (e-commerce), Booking's Kayak (travel queries), Microsoft's LinkedIn (job queries), and WebMD (health queries). Some users will navigate directly to such content, websites, and apps rather than go through Google.
​Social networks offered by ByteDance, Meta, Snap, and Twitter. Some users increasingly rely on social networks for product or service referrals, rather than seeking information through traditional search engines. Other online advertising platforms and networks, such as Amazon, AppNexus, Criteo, and Meta, that compete for advertisers that use Google Ads, our primary auction-based advertising platform.
 
Other forms of advertising, such as billboards, magazines, newspapers, radio, and television. Their advertisers typically advertise in multiple media, both online and offline. Companies that design, manufacture, and market consumer hardware products, including businesses that have developed proprietary platforms, such as Amazon, Apple, and Microsoft. Digital assistant providers, such as Amazon and Apple.
 
Providers of enterprise cloud services, such as Alibaba, Amazon, Microsoft, and Salesforce.
Providers of digital video services, such as Amazon, Apple, AT&T, ByteDance, Disney, Hulu, Meta, and Netflix. Other digital content and application platform providers, such as Amazon and Apple. Providers of workspace connectivity and productivity products, such as Meta, Microsoft, Salesforce, and Zoom.
 
Competing successfully depends heavily on their ability to develop and distribute innovative products and technologies to the marketplace across our businesses. Specifically, for advertising, competing successfully depends on attracting and retaining: users, for whom other products and services are literally one click away, largely on the basis of the relevance of our advertising, as well as the general usefulness, security, and availability of our products and services; advertisers, primarily based on our ability to generate sales leads, and ultimately customers, and to deliver their advertisements in an efficient and effective manner across a variety of distribution channels; and content providers, primarily based on the quality of our advertiser base, our ability to help these partners generate revenues from advertising, and the terms of our agreements with them.

GOOGLE'S SWOT ANALYSIS

Google’s TreatsGoogle might had enjoyed the dominance of search engine marketplace for quite some time, however lately trend from TikTok, I don’t search I TikTok is taking gradually more of Google’s marketplace.  As date Google has market share of  +80% in desktop searches worldwide. Google’s next competitor Bing is working to integrate ChatGPT with its search engine, that is supported by OpenID to power Bing, this might be the start of  the real Google’s challenge.
Google’s OpportunitiesThe shift to online, as well as the advent of the multi-device world, has brought opportunities outside of the U.S., including in emerging markets, such as India. Google are continue to invest heavily and develop localized versions of our products and advertising programs relevant to their users in these markets. This has led to a trend of increased revenues from emerging markets. Google expect that their results will continue to be affected by their performance in these markets, particularly as low-cost mobile devices become more available. This trend could affect our revenues as developing markets initially monetize at a lower rate than more mature markets.
Every year, there are trillions of searches on Google, and 15% of the searches we see every day are new. Google continue to invest deeply in AI and other technologies to ensure the most helpful search experience possible. YouTube provides people with entertainment, information, and opportunities to learn something new. And Google Assistant offers the best way to get things done seamlessly across different devices, providing intelligent help throughout a person's day, no matter where they are.
To diversify its revenue stream, Google is placing big bets on its cloud services. Cloud Services: In fiscal year 2021, about 7.5% ($19.2 Billion) of Google’s annual revenue came from its Google Cloud Platform (GCP) and its service.
Google’s weaknessIn 2021 Google generated more than 80% of total revenues from the display of ads online. Heavily overdependence on Advertisement: 80% of its total revenue  generates from  its advertisement related. Advertisement space is highly cyclical, competitive, and rely heavily on macroeconomic conditions. Inflation is 40 years high, this might affect consumers’ confidence and hurt Google’s revenue. 

Unfair Business Practices: As the most used search engine, Google exploits this advantage unfairly to prevent the entry new actors in the sector. Politicians are keep monitoring Google’s privacy practice. 

HOW HEALTHY IS GOOGLE'S FINANCIAL SITUATION ?

​Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value.

RISK FACORS FACING GOOGLE

​Google’s operations and financial results are subject to various risks and uncertainties, including but not limited to those described below, which could harm our business, reputation, financial condition, and operating results, and affect the trading price of our Class A and Class C stock.

GOOGLE'S RISK SPECIFIC

They generate a significant portion of their revenues from advertising, and reduced spending by advertisers, a loss of partners, or new and existing technologies that block ads online and/or affect our ability to customize ads could harm our business.
 
As date Google generated more than 80% of total revenues from the display of ads online in 2021. Many of their advertisers, companies that distribute our products and services, digital publishers, and content providers can terminate their contracts with us at any time. These partners may not continue to do business with us if we do not create more value (such as increased numbers of users or customers, new sales leads, increased brand awareness, or more effective monetization) than their available alternatives. Changes to their advertising policies and data privacy practices, as well as changes to other companies’ advertising and/or data privacy practices have in the past, and may in the future, affect the advertising that we are able to provide, which could harm our business. In addition, technologies have been developed that make customized ads more difficult or that block the display of ads altogether and some providers of online services have integrated technologies that could potentially impair the availability and functionality of third-party digital advertising.
 
In addition, expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns. Adverse macroeconomic conditions have affected, and may in the future affect, the demand for advertising, resulting in fluctuations in the amounts our advertisers spend on advertising, which could harm our financial condition and operating results.

R & D

R&D is a vital post for technology companies. Google are continually innovating and building new product features that will help users, partners, customers, and communities. They have invested more than $100 billion in R&D over the last five years. Google’s R&D expenses increased $4.0 billion from 2020 to 2021. The increase was primarily due to an increase in compensation expenses of $3.5 billion, largely resulting from an 11% increase in headcount, and an increase in professional service fees of $516 million. This increase was partially offset by a reduction in depreciation expense of $450 million including the effect of our change in the estimated useful life of their servers and certain network equipment.

BEHIND THE SCEEN OF GOOGLE - MANAGEMENT'S

Sundar Pichai(49Y)
6.1-years average management tenure
$ 6,322,599 compensation
Mr. Sundar Pichai is Chief Executive Officer at Alphabet Inc. since December 2019. Mr. Pichai has been the Chief Executive Officer of Google Inc., since October 02, 2015. Mr. Pichai leads the product management and innovation efforts for a suite of Google's search and consumer products, including iGoogle, Google Toolbar, Desktop Search and Gadgets, Google Pack and Gears.

He has experience developing high-tech consumer and enterprise products. Mr. Pichai served as Senior Vice President of Products at Google Inc. (currently known as Alphabet Inc.) from October 2014 to October 2, 2015. He served as Senior Vice President of Android, Chrome & Apps at Google Inc. from March 2013 to October 2014. Mr. Pichai served as the Head of Android Mobile Software Division at Google Inc. since March 2013.

He served as the Head of the Chrome Browser & Computer Operating System at Google Inc. He served as Senior Vice President of Chrome at Google Inc. from April 2011 to March 2013. He served as Vice President of Product Management at Google Inc. He joined Google in 2004. Prior to Google, he served various engineering and product management positions at Applied Materials and served as Management Consultant of McKinsey & Company, Inc. for a variety of software and semiconductor clients. He has been a Director of Alphabet Inc. since July 19, 2017.

​He served as a Director of Jive Software, Inc. from March 2011 to July 30, 2013. He served as a Member of Board of Advisors at Ruba, Inc. He was awarded an Institute Silver Medal. He was named a Siebel Scholar and a Palmer Scholar at the Wharton School. Mr. Pichai received Bachelor of Engineering degree with honors in metallurgical engineering from the Indian Institute of Technology, Kharagpur.
He holds an M.S. in Engineering and Materials Science from Stanford University and an MBA from the Wharton School of the University of Pennsylvania

WHO OWNS GOOGLE- OWNERSHIP STRUCTURE

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