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Could Google Do it Again? (Nasdaq:GOOG, NYSE:T, NYSE:VZ)

December 17th, 2012

In focus this week; Google (Nasdaq:GOOG) could do it again, 7.4% from the number three telecom player and the sitfa. Google is about to enter the internet provider business and it looks like they could repeat their complete domination of the online search business.

Google’s internet signal will be 100 times faster than cable providers and offers television – for $70 a month.

Barron’s says they can be serious competition for ATT (NYSE:T), Verizon (NYSE:VZ) and cable providers. This could wreak havoc in this market.

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They are in the test phase now but BTIG Research’s Rich Greenfield, who covers cable providers, said after visiting Google’s Kansas City test site  “They are much more serious than anyone is giving them credit for.”

Blair Levin of the Communications and Society Program at the Aspen Institute said that no one can compete with Google in running big networks and they have figured out how to deliver a gigabit of bandwidth more cheaply than anyone else.

This will take time but bet on Google on this one. Barron’s called this a “disruptor” and serious tech investors have to be looking at this one.

If nothing else, it is a heck of lot more interesting than who will sell more PC’s next year!

……………..

7.4% From the Number Three

Century Link (NYSE: CTL) is the number three provider of telecom services in the U.S. and it boasts a huge dividend that by all measures looks to be very secure.

According to a Barron’s article, over the past few years they have been making key acquisitions that have allowed them to bundle services, expanded their territory and offer everything from internet to cloud data services.

A Wells Fargo analyst, Jennifer Fritzsche said they are generating free cash flow of $5 per share, which is the best of all the wired and wireless providers, and considering current market interest rates she says this one is more like a bond with growth than a stock.

Kent Croft of the Croft Value Fund said in a Barron’s article that he sees as much as a 20% total return in the next year and their stable cash flow makes it a good bet even if the economy worsens.

Management is making all the right moves. They are only paying out 55% of their cash flow in the dividend, which leaves a lot of room for paying down debt and other long term uses, and they are squeezing more value than expected from their acquisition of Qwest.

They are adding fiber access via their cellular towers and growing their data centers to provide for increasing demand for cloud computing.

In a market where 3% from a good company is considered a great dividend, 7.4% might be so high it could scare away income investors, but this one looks like it has some real legs.

CTL is definitely worth looking at.

……

The SITFA: Netflix Edition

This week it has to go to the board at Netflix.

Are these people asleep or inept? I hope for the sake of their reputations they are sleeping.

In a little over a year, in one of the dumbest moves in corporate history, the stock dropped to $54 from a high of about $300. All driven by the CEO’s efforts!

$300 to $54 in 15 months!

Netflix owned the video world, I mean no one was even close to them, and they decided to jack up prices so high and in such a stupid way even the most devoted movie addicts left in droves.

The market cap dropped from $16.7 billion to about $3 billion. A $13.7 billion drop!

Now the CEO is under investigation by the SEC, something no one and no company ever wants, because he decided it was ok to release material information on Twitter.

Isn’t that where people go to exchange gossip? Hasn’t this guy heard of the Journal? You have to be kidding me.

If he could provide some support for making an obvious change from what the SEC requires for material releases it might be excusable. But this guy is at best is just back pedaling.

Excuse me! I was fired once for questioning the quality of my employer’s advertising. This guy is a one man wrecking crew and he still has a job.

Who is this guy and why is he the CEO of anything?

Good Investing,

by Steve McDonald, Investment U Research


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