FinancialSkeptic's Blog

Climbing The Financial Wall of Worry

Google becomes a loan shark $GOOG #adwords

Image representing Google Search as depicted i...

Image via CrunchBase

Google (Nasdaq:GOOG) announced they will offer a MasterCard (NYSE:MA) product to certain small and medium-sized suckers. Low interest rate and no points program are features. They claim to be following the track of other vendor financing ventures. Problem is other vendor financing programs are on something tangible. Sure hardware from IBM becomes technologically obsolescent. But if IBM (NYSE:IBM) repo’s its hardware you are out of business.

Google is financing an intangible. If the business fails or just stumbles where is the leverage. Google can threaten a withdrawal of service but that will open a host of legal issues which Google will eventually lose. But in the meantime to keep recalcitrant advertisers in line they will need to muscle them just like a loan shark.

The financial problem will be when the vendor becomes a deadbeat the entire card balance will be written off. Not sure if the incremental revenue from the seasonally challenged vendor will offset the 100% loss. Small business has a high mortality rate. Big banks know this; that is why small businesses find it so hard to borrow.

Google will eventually damage their brand when they write off bad loans for marketing campaigns where the google search engine failed to deliver results. But in the meantime watch for a small increase in yield as cash is moved from money market returns to charge card returns.

Disclosure: George Gutowski writes from a caveat emptor perspective. I have no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

Related articles

July 21, 2011 - Posted by | Disclosure, Earnings Forecasts & Guidance, Investments, Investor Relations, Reg FD, Stocks | , ,

4 Comments

  1. An interesting discussion is worth comment. I think that you should write more on this topic, it might not be a taboo subject but generally people are not enough to speak on such topics. To the next. Cheers

    Comment by drip feed blasts | July 26, 2011

  2. Can I just say what a relief to find someone who actually knows what theyre talking about on the internet. You definitely know how to bring an issue to light and make it important. More people need to read this and understand this side of the story. I cant believe youre not more popular because you definitely have the gift.

    Comment by how to backlinks | July 26, 2011

  3. I’m impressed, I must say. Really rarely do I encounter a blog that’s both educative and entertaining, and let me tell you, you have hit the nail on the head. Your idea is outstanding; the issue is something that not enough people are speaking intelligently about. I am very happy that I stumbled across this in my search for something relating to this.

    Comment by how to link to a website | July 26, 2011

  4. [...] Google becomes a loan shark $GOOG #adwords (financialskeptic.wordpress.com) [...]

    Pingback by Google Algorithmic Confusion $GOOG #searchengines #SEO « FinancialSkeptic's Blog | July 27, 2011


Sorry, the comment form is closed at this time.

« Previous | Next »

Follow

Get every new post delivered to your Inbox.

Join 235 other followers