BizJournals Portfolio
Home >   Business Views, Opinions and Blogs >   Business Blogs >   Tech Observer >  

Why Tomorrow Could Suck For Tech

Tech Observer

by Kevin Maney
Main
The Marc Andreessen Interview   McCain to YouTube: Don't Tread On Me

Recent Blog Posts

Links

Oct 15 2008 4:35pm EDT

Why Tomorrow Could Suck for Tech

Kevin Maney writes: Make sure the lifeboats are ready. Cue the band to play on the poop deck. Google will report quarterly earnings tomorrow, and if they're disappointing, the Internet sector will be going down like a toy boat in a flushed toilet.


Some analysts are already pushing down estimates. Others are holding tight and thinking the stock -- already down 45% this year -- will bounce back up into the 500s. In the midst of the financial meltdown, CEO Eric Schmidt told the world that Google should be fine. Wall Street isn't so sure. Google closed today at $339.17, down 6.5% on the day.

Compared to its competitors, Google is doing great, continuing to sweep in a greater portion of search advertising market share. But that's why Google could whack the whole Net industry. If the company is hitting on all cylinders and leaving competitors in the dust, and its earnings STILL disappoint -- what hope is there for any Internet company? This would be the harshest confirmation yet that Net advertisers are cutting back in a significant way. And over the past five years, just about every consumer Web site has been built using an advertising model. If ads aren't there to drive revenue, nothing will be driving revenue. And, you know, that's going to suck for a lot of companies.

What's the prognosis? I'd say: not good. Google is no IBM. It doesn't have long-term contracts and recurring revenue streams. It's got a self-administered ad platform that advertisers can use to turn off the spigot overnight, knowing they can turn it back on the second things look better. I'm not saying Google's earnings are likely to be terrible -- they're just not likely to be good enough to ease investors' minds about ad spending.

With any luck, I'll be horribly wrong and Google will pleasantly surprise all of us. Lord, I hope so.


...

Comments

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.


Connect With Portfolio.com
Like Portfolio on Facebook

Come on, like us—you know you want to.

Follow Portfolio on Twitter

Follow us and if you're an innovative entrepreneur, we'll return the favor.

The Mix

Today's top stories, conversation starters, and the back nine business bites.

spotlight on

Slideshows

500 Startups Hits New York

Dave McClure's brainchild makes its way to New York and introduces East Coast money folks to some intriguing new companies. View Slideshow