Facebook and Google Join Forces
Facebook has agreed to let Google sell its ad inventory. The agreement will provide Google valuable insight into its business, including where the dollars come from and how much the inventory sells for, thereby strengthening its position in the online advertising market.
Facebook launched its FBX ad exchange last year and has kept Google out of it so far. Google’s entry will eliminate several smaller players, but Facebook stands to gain. With more advertisers vying for its space, Facebook is likely to see bid rates go up, which will add to its revenues. Higher rates will be an added positive for Google, which will collect a fee on sales.
Google Quiets Critics, Shares Soar
Google didn’t do anything spectacular last quarter, but both investors and analysts were surprised by the 26% increase in its paid clicks. Of course, there was the mitigating factor of an 8% decline in prices, but this did not appear to affect its margins.
Internet usage is increasingly moving to mobile devices where rates are lower. This is likely the reason for weak pricing. Google is more than making up with paid clicks.
It certainly looks like Enhanced Campaigns had something to do with the results (Google transitioned all its ad clients to the platform in July). But the company did not shed any light on this except to say that it was directionally the right way to go for Google.
Motorola revenue grew double-digits sequentially, but the business remained a drag despite the Moto X launch (not really unexpected). Google intends to increase spending on marketing and distribution.
Intel Beats, Broadwell Delayed
Intel (INTC) managed to beat expectations in the last quarter. Guidance could have been better, but was most probably impacted by a slower start to its mobile strategy. Still, management assured that Intel had 50 designs, so there should be some positive impact from that.
The other disappointment was with respect to the Broadwell pushout, where Intel saw some yield issues in the last quarter. Management stated that the problem was resolved and Broadwell would be available next quarter.
Intel really needs to display mobile market strength, because its core PC business is likely to continue shrinking and its server business will get increasingly competitive. Increased competition notwithstanding, the Data Center segment did very well in the last quarter.
Yahoo Rides Alibaba Strength
Yahoo’s (YHOO) core business showed some positive trends, with search ads up 21% in the last quarter and display ads seeing positive growth for the first time in nine quarters. Prices declined in both categories.
However, earnings were better than expected due to Alibaba’s contribution and a lower share count. Yahoo also managed to lower the amount of Alibaba shares to be offloaded during the IPO, which should enable it to benefit from subsequent appreciation in share prices.
Last 6 Months
Other stories you may have missed-
Apple to unveil new iPad and Microsoft its new Surface on Oct 22
Apple building luxury brand status: Apple (AAPL) has hired Angela Ahrendtz, the current CEO of Burbery. Ahrendtz will be joining Apple next year as SVP, responsible for strategic direction, expansion and operation of Apple’s retail and online stores. Under Ahrendtz, Burbery increased focus on product design and quality, as well as digital and social media promotion. Apple is already a leading brand and its decision to target the wearable devices category could have spurred this hire.
Facebook acquires Onavo: Last week, Facebook acquired Onavo, which has developed important data compression technology that it claims will reduce data consumption on smartphones by up to 80%. Facebook, along with companies, such as Qualcomm (QCOM), Nokia (NOK), Samsung, Opera and Mediatek have announced an initiative called Internet.org, which aims to provide low-cost Internet access to people who currently don’t have access. It is expected that Onavo’s data compression technology will come in handy.
Facebook easing privacy rules for teenagers: On Wednesday, Facebook stated that teens aged 13 to 17 would now be able to post status updates, videos and images that would be visible to the public. They were earlier visible to friends or friends of friends only. The teen segment is a very important category for advertisers, so this is likely to result in better-targeted ads for the segment. Shares jumped following the announcement.
Microsoft hitting Google below the belt: Microsoft has been running a campaign called Scroogled, which is aimed at undermining Google and its business tactics with a view to diverting customers to Bing. Techcrunch says that according to statistics recently published by AdAge and Microsoft’s own sources, the Scroogled campaign was greatly reducing Google’s favorability versus Bing. Apparently, the chances of viewers recommending Google to a friend falls by 10% while the chances of their recommending Bing increases by 7% as a result.
Big companies reporting this week: Texas Instruments, Microsoft, Amazon, Netflix, EMC, Akamai and MCO report this week. Catch our previews in the Earnings Preview section.
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