An analyst recently speculated that Google will be the first publicly traded trillion dollar company in the world.
They were presumably not extrapolating from today’s chart, where Google’s share price dropped nearly 2.5% after hours after the company reported profits and earnings per share down compared to last year, despite a 20% rise in revenue.
The issue is Google only real business – display and search advertising, suffering from the move to mobile, which generates less profit per click.
Microsoft is however a very well diversified company, with over 16 different billion dollar businesses, which has for example allowed it to weather the Windows and PC slow down very well,
Google first passed Microsoft’s market cap in 2012, but as the graph above shows their share price has been in the doldrums over the last year, while Microsoft has soared more than 15%. At the time of writing, based on after hour dealings, Microsoft is worth $351 billion, while Google is down to $344 billion.
The drop in profits and the reaction of the market may have played a role in the much higher cost of Google’s new Nexus 6 range, which are being marketed competitive to the iPad and iPhone, rather than very cheaply, as is traditional for Google. Hopefully this will also mean their habit of flooding the market with very low cost and unprofitable devices such as the Moto G will come to an end as market realism sets in.
Thanks Imperial Dynamics for the tip.