GOOG stock gets downgraded - and Powerset is mentioned as one of the reasons
On April 3rd, Trip Chowdry, of Global Equities Research, downgraded Google (GOOG) to Neutral from Buy, and set a price target of $425, nearly 10% below the current price. While many of the other analysts are riding him pretty hard for the downgrade, I thought it was interesting enough to post. If you want to see the comments, feel free.
The list of items that he gives for downgrading the stock includes:
- He says that YouTube users numbers are “hyper-inflated,” and says that “Google will need to come clean on [the] exact number of unique individuals on YouTube.”
- He says 75% of Microsoft Vista users are using Vista desktop search, and 20% are using Vista Web Search.
- He says both Microsoft and Yahoo ad networks offer lower costs per click and better conversion rates than Google.
- Chowdhry contends that pre-roll ads on YouTube “are not working,” and that “sponsorships and banner ads are also not working.”
- He says the company is losing the technology lead in search to the start-up PowerSet, although I would note that PowerSet hasn’t actually launched yet, so it would seem hard to tell. He does say that Google could lose talent to the newcomer.
- He also has some nasty things to say about Michael Moritz, the company’s departing director, and a partner at Sequoia. “We think Mike Moritz…probably had a conflict of interest and may have sucked Google into believing hype regarding…the acquisition of YouTube, and his resignation from Google’s board is not sufficient. We think Sequoia Capital may be asked to return $1.6 billion to Google.” Somehow, that seems pretty unlikely. But that’s what he thinks.