Tags: Google | disappear | five | years

Ironfire Capital’s Jackson: Google May ‘Disappear' in 5 to 8 Years

Sunday, 21 Oct 2012 12:29 PM

By Dan Weil

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Google’s weak third-quarter earnings report turned some analysts pessimistic toward the technology colossus.

"They could disappear in five to eight years and disappear in the sense that Yahoo used to be the king of search. Now, for all intents and purposes, Yahoo has disappeared," Eric Jackson, founder of Ironfire Capital a technology-oriented investment firm, tells CNBC.

Google reported profit for the quarter, excluding some items, of $9.03 a share, compared to Wall Street expectations of $10.65 a share.

Editor's Note: Google Banned This Video But You Can Watch it Here

And the company reported revenue, excluding sales passed to partner sites, of $11.3 billion, compared to analysts’ average forecast of $11.8 billion

Google’s main problem is that the price advertisers paid per click on ads dropped 15 percent in the third quarter from a year earlier, even as the number of paid clicks on ads soared 33 percent.

The increase came from the exploding use of smartphones and tablets. But ads on those new platforms are much cheaper than on traditional personal computers and laptops.

Smartphone ads can cost 40 percent less than traditional computer ads, says Herman Leung, an analyst at Susquehanna International Group.

“The big pressure is actually coming from mobile,” he tells Bloomberg. “It’s a concern for investors because they [Google] just make less on mobile right now.”

To be sure, while Google’s issues are serious, “we consider the company slightly undervalued at these levels,” Morningstar analyst Rick Summer wrote Friday, when Google closed just under $682 a share.

Editor's Note: Google Banned This Video But You Can Watch it Here

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