For Alphabet (NASDAQ:GOOGL,NASDAQ:GOOG), the home of Google and GOOGL stock, these are both the best of times and the worst of times. They’re the best of times where it counts, on the bottom line.
Last year, GOOGL earned $30.7 billion, or $43.70 per share fully diluted, on revenue of almost $137 billion. Over one dollar in five of revenue hit the net-income line. Despite $25 billion of capital spending last year, GOOGL has just $4 billion in debt and over $109 billion of cash.
A reporter can write “Buy GOOGL stock when it stumbles” but it doesn’t stumble. GOOGL stock is up 15.4% so far in 2019.
But according to the public press, Google is nothing but a series of disasters.
The Bad News for GOOGL Stock
Google just killed two of its most popular features, Google Plus and Inbox. Over a half-dozen of its other products have been killed so far this year, including Google Allo, Chromecast Audio, Google Fiber, and the goo.gl URL shortener.
YouTube, once a crown jewel, has become a haven for toxic content that the company seems unable to tame. The Chrome operating system is becoming as fragmented as Android, creating security problems. The Pixel 2 phone has been discontinued after less than two years, reportedly because it’s junk. The head of GOOGL’s India unit just abandoned ship.
Google is trapped between conflicting demands for privacy and security. Around the world, it faces calls for governments to regulate its services. In the U.S., Presidential aspirant Elizabeth Warren wants it broken up.
Google’s treatment of contract employees has been shoddy. Its on-again, off-again relationship with China has Republicans attacking it. Its efforts to navigate political waters are winning nothing but criticism from all sides.
What Does Google Want?
In the past I have suggested that Google wants to retreat from controversy, becoming more like Amazon.com (NASDAQ:AMZN) with retail alliances and a cloud-infrastructure offering under Thomas Kurian, formerly of Oracle (NASDAQ:ORCL).
But it’s hard to tell exactly what GOOGL wants because there’s no clear message coming from the top of the company. Each of the other four Cloud Czars – Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:FB) and Amazon – has a strong, recognizable CEO. Big-tech companies have traditionally been run on an imperial, or entrepreneurial, model.
The Bottom Line on GOOGL Stock
At the end of April, GOOGL will deliver its first-quarter earnings report. Analysts on average expect Its earnings per share to come in at $10.57, on revenues of nearly $30 billion, With a price-earnings multiple of 27.4, very close to that of Microsoft stock, GOOGL stock looks like a bargain.
It’s time put someone in charge of GOOGL who will step out of the shadows. Google’s public drift has GOOGL stock headed for the rocks.
Dana Blankenhorn is a financial and technology journalist. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family, available now at the Amazon Kindle store. Write him at [email protected] or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in MSFT, AAPL and AMZN.