Google Inc (GOOGL)’s Expense Growth Very Healthy: Anthony Diclemente

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Google Inc (NASDAQ:GOOGL) is one of the top global technology company and currently considered by many as the best run company in the world. They focus primarily on search engines, online advertising, Operating Systems and hardware products. Google has a global reach and sells its products and services to almost every corner of the world. It has recently announced its second quarter earnings, a key highlight of which was a revenue growth of 22% on the year to $16.0 billion. Anthony Diclemente of Nomura talked on CNBC about the Google’s second quarter earnings.

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Diclemente thinks the main concern for Google Inc (NASDAQ:GOOGL) is the deceleration of revenue growth and increased expense growth and CAPEX. He feels that the 20% revenue growth and the fact that the company trades at less than 20 times earnings have removed some concerns. He thinks the company’s expense growth are very healthy as they are supporting the revenue initiatives.

“But I still think Google is a core holding in technology. It trades at a very reasonable earnings multiple when you juxtapose that with the top line growth, which continues to be very impressive for a company of Google’s size,” He added some optimism on Google Inc (NASDAQ:GOOGL).

Google Inc (NASDAQ:GOOGL) announced that their CBO (Chief Business Officer), Nikesh Arora will be parting ways with the company. Diclemente thinks that Arora was a respected person and he will be joining Softbank Corp as their CEO. He thinks that Softbank Corp has been very aggressive in their latest moves.

Softbank Corp, Asian-Japanese Conglomerate Company has made many investments in Internet and media globally. He feels that this is the best opportunity for Arora to achieve his ambition of being a CEO of a company in internet-media market. He thinks that Arora could not have gotten this opportunity at Google. He thinks that this move by Softbank indicates their ambitions and goals.

Many people believed that Google Inc (NASDAQ:GOOGL) may buy a company like Time Warner Inc (NYSE:TWX) or some other old media company mainly to give a new dimension to Youtube LLC. Diclemente think that Youtube LLC may definitely benefit from professionally licensed content and they can have some streaming device to telecast Youtube to the living room. But he was not sure if Google would buy a company of Time Warner’s size.

Market cap of Time Warner is at $80 billion, which is approximately a quarter of Google Inc (NASDAQ:GOOGL)’s market cap of around $400 billion. Diclemente said that he would not rule out the event of Google buying Time Warner.

“I think it’s possible that a big technology company realizes the strategic value of content, but there’s been rumblings that Google could license from the NFL and they could do something, ” he said.

Another option is that Google Inc (NASDAQ:GOOGL) can buy a part of CNN at $5 billion to $6 billion to boost their media market.

Disclosure: None

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