Googles Tax Problem; Uncle Sams Opportunity; Thank You Europe $GOOG, $YHOO, $FB, $TWIT

Google (Nasdaq:GOOG) is being hunted down by european tax collectors controlled by austerity starved politicians. Google and other American companies are seen as fat cows. Minimal local political consequences to extracting a few pounds of flesh.

Google rolls up the revenues to Google Ireland and then shunts the cash off to an affiliate in Bermuda. Pretty clever except UK, France and Germany feel they are not getting their fair share.

Come back to USA. Huge amounts of corporate cash are parked off shore. Corporations do not want to pay US income taxes on funds earned elsewhere. Not a bad argument if local taxes had been paid. But if the funds are in Bermuda and Ireland no one has paid something substantial.

So far the argument has been a classic push. Competing governments have not been able to break the logjam. Several corporations have huge off shore cash reserves with no immediate plans to deploy.

US politicians are under increasing pressure to resolve the issue. The uninformed electorate sees big buck off shore held by uber-large entities and joins the local Occupy Wall Street movement. End of electorates analysis. One person one vote does not equal sound financial/economic thought.

Corporations to be frank are motivated by stupid tax rules. Most of the key executives are  domiciled in the US and would probably prefer to see capital returned to US and then move globally without restrictions.

Congress will most likely mandate local state taxes be paid on internet transactions. Politicians also would love to be able to say they forced the repatriation of billions from overseas back to US. This will appease the Occupy crowds.

Watch for tax treaties between  the US and major European governments (EU as well) which will disadvantage off shore cash.

Investors after the initial sticker shock of increased tax rates will see cash coming into play more easily. Demands for effective economic deployment will grow. Investors did not buy to hold cash they can do that on their own.

George Gutowski writes from a caveat emptor perspective.

Google Achilles Heel; European Income Taxes; Not so Good for Google $GOOG $YHOO $FB $TWIT

Google (Nasdaq:GOOG) pays next to no income taxes on European revenues. UK, France and Germany all have Google in their sights. Google currently designates units in those countries as providing marketing and support services to Google Ireland which in turn transfers most of its turnover to an affiliate in Bermuda.

The structure is legally sound for now. except the guys who make the laws no longer like it. Google is advertising for sales and marketing staff in UK, France and Germany. So if the sale becomes local because of the local sales and distribution arms taxes will become local as well.

European governments are all fighting austerity and other financial issues. Quite frankly they have no political choice but to increase tax revenues. Google is a fat cow which will be slaughtered as quickly as possible. The UK, France and Germany constitute and will always constitute the overwhelming bulk of Google European revenue.

While Google is currently in the tax mans sniper scope. Yahoo (Nasdaq:YHOO), Facebook (Nasdaq:FB) and Twitter (To be announced) who all will depend on European revenues will be treated in the same fashion.

Big increases coming to global income tax rates which means negative pressure on EPS and potential dividend rates.

Death and taxes are inevitable. Google is not on its death-bed so it must be taxes.

George Gutowski writes from a caveat emptor perspective.

$JCP enney shoots the $AAPL guy. Target hires a $YHOO guy. Just what is the fashion in retail?

JCPenney (NYSE:JCP) whacked their Apple executive who was supposed to save them. Ackman cannot pick them. Now everyone is saying Apple executives are not very good outside of the Apple eco-structure.

Take a look at Target (NYSE:TGT) They just added to the board Henrique de Castro 47 who since Nov 2012 has been the chief operating officer of Yahoo (Nasdaq:YHOO) and has been at Google (Nasdaq:GOOG), Dell and McKinsey. Now clearly he is a board member and not the quarterback. But I find the hook up of a very newly minted COO at Yahoo coming on the board of Target.

Lets take a look at the rest of Targets board. Eleven independent directors. Average age of 55 and 7.5 years of tenure.

Gregg Steinhafel 58 is the President, CEO and Chairman. He has been with Target since 1979 when he joined as a merchandising trainee. Way more solid as a quarterback than the JCPenney guy who used to be an Apple guy.

Solomon D Trujillo 60. CEO of Telstra Australian Telecom. Why an Australian?

Mary Minnick 52 Partner with Lion Capital a consumer focused Private Investment Firm. 23 year career with Coca Cola culminating in senior executive positions. Consumer and retail. Got it.

Derica W Rice 47 EVP Global Services and CFO Eli Lilly & Company. Global perspective in a highly regulated drug industry.

Mary N Dillon 50 President and CEO of US Cellular Corp Wireless Telecom. Previously EVP and Chief Marketing Officer of McDonald’s. Burgers, cell phones they’re all consumable right.

Anne Mulcahy 59 Former Chairman and CEO of Xerox. Director of Washington Post and J&J. One of the longest-serving directors. Some logic to replace just to prevent staleness on the board.

Calvin Darden 62. Real Estate Development now. but was SVP of US operations for United Parcel Services. Gets the facilities and logistics for on-line fulfillment.

Roxanne Austin 51 is currently the President of Austin Investment advisors since 2004. Professional investor who can empathize with investor concerns.

James Johnson 68 Vice Chairman of Perseus a Merchant Banking Private equity firm. Also a director of Goldman Sachs Group. At the age of 68 with 13 years of tenure on the board he is probably a candidate for replacement in the near future.

John G Stumpf 58 Chair, President and CEO of Wells Fargo. Full time CEO. Does he really have the time to pay attention to Target.

Douglas Baker 54 24 year veteran of Ecolab where he is now President and CEO.

The board has clear strengths on retail/consumer with a smattering of financial engineering. Three active duty CEO or COO probably find themselves short for time but the CEO is a seasoned merchant.

This group has figured out a way to include the very new Chief Operating Officer of Yahoo onto the board. Very different from the JCPenney experience.

George Gutowski writes from a caveat emptor perspective.

 

 

Ross Levinsohn is Heading Up What? $YHOO

Ross Levinsohn formerly interim CEO of Yahoo (Nasdaq:YHOO) has found a job as CEO of the collection of music, media and entertainment brands, which has been renamed Guggenheim Digital Media.

His roots (actually he doesn’t have any he keeps changing jobs) are in interactive media so this makes sense. No word on any equity participation. I’m sure he wasn’t interested in just a couple of bucks.

But in a sense the move is disappointing. From almost running Yahoo to running some digital properties. But I suppose this is the rear view mirror analysis of what the yahoo board went through.

Ross Levinsohn resume screams digital media and advertising. You find a nice wave and ride it for all your worth. He’ll probably be good at it or he’ll be out on his ear. But he knows that. for a while this is what Yahoo wanted.

But the board wanted to go back to deep technology roots when they decided on what the game changers were. They want to create the platforms that allow a Ross Levinsohn to excel at. Yahoo knew he was not an engineer and could never deliver deep thinking on technology.

Ross Levinsohn was the tail end of Board of Director manic-depressive behaviour exhibited by the Yahoo Board before they got it right with Marissa Mayer ( I think). But I think he just confirmed why he did not keep the big job at Yahoo.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

 

Surprising Twitter Power of Financial News $YHOO $NWSA $TWIT #IR #corpgov

If you are a serious investor you are also a serious business news junkie. The blood sport known as investing is an information seeking culture to the extreme. So lets look at the power of various business news outlets and their supposed power grading in the twitter world. You may be surprised to learn that CNBC does not get a top billing.

So a few words about the power ratings. Followers count big time. You need followers to outnumber following by quantum amounts. Your followers are also graded and if they have more followers than following that’s very powerful. The more often you are retweeted the better.

The power rankings are out of 13.1 million. That’s how many twitter users actually count and register. So here are the results in order of power.

1. twitter@businessinsider 144K followers. Power rank 298
2. twitter@cnnmoney 445K followers. Power rank 1035
3. twitter@yahoofinance 158K followers. Power rank 1690
4. twitter@foxbusiness 116K followers. Power rank 2361
5. twitter@ft 709K followers. Power rank 2672
6. twitter@forbes 1108k followers. Power rank 3721
7. twitter@bloombergnow 186K followers. Power Rank 4202
8. twitter@cnbc 932K followers. Power Rank 4839
9. twitter@bw  156K followers. Power Rank 5739
10. twitter@fortunemagazine 691K Followers. Power Rank 6821

This is not taking into account the power rankings of individual journalists and editors who are the real hard-working heroes getting the stories. But if you’re an investor relations pro trying to work the social media angles the twitter power rankings do not match up to the usual mind share that some of these news organizations normally have.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti where he has a power rank of 1.1 million.

 

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Google Diagnosis = Manic Depressive The Revenue Model is Broken. $GOOG $RRD $YHOO

Old RR Donnelley printing building. (Photo credit: clarkmaxwell)

Google (Nasdaq:GOOG) had an accident that was not its fault. R.R. Donnelley (Nasdaq:RRD)filed with the SEC before all was ready. Not Google’s fault. RR Donnelley has much explaining to do. Much talk around the water cooler about that. Trading suspended and markets became inefficient except for the lucky few. hope RR Donnelley has lots of insurance.

Onto the fundamentals. Google news is bad. Surprisingly bad. Google has a fundamental problem. It’s all about the desk top computer in whatever form. It’s not strong on mobile devices which is where the market is clearly headed. Wonder if Yahoo (Nasdaq:YHOO) which now has a distinct Google DNA graft will understand that.

Here is the manic-depressive bi-polar factor:

Q3 average cost advertisers paid Google per click fell 15% Y/O/Y, and fell 3% from the prior quarter. Not good this means you have no pricing power and your advertiser customers are beating you up. Now do the flip and ponder this point.

Paid clicks increased 33% from a year earlier and were up 6% from the Q2. This is the insanity. you are generating more demand activity but you cannot charge more for it. Supply demand logic is not working.

Has Google lost control over its business model? Who cares about the RR Donnelley thing, it does not matter.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

Yahoo new CFO, new COO and new other stuff. Which one will misfire? $YHOO $GOOG

Image via CrunchBase

Yahoo (Nasdaq:YHOO) is drafting hard and fast. New chief operating officer De Castro from Google (Nasdaq:GOOG). They in turn will spawn new hires at lower levels as the deck gets shuffled.

The new hires were to be expected. Yahoo has to rejuvenate or die. Marissa Mayer was obviously only the beginning. But as sports fans know all too well when a team rebuilds not every draft, not every trade works out. There will be surprises.

The question will be what does Yahoo do about the duds. How fast do they fix.

In the meantime the market is liking it. The short position dropped by some 26%. Yahoo is no longer the stock you love to hate. The uptick-downtick is 2.7. The dividend is far away as everyone has a very attractive stock option plan. so it`s all about swinging for the fences.

As we all know Babe Ruth struck out a whole lot and so will these guys even if they are Babe Ruth.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

Google Extends Portfolio of Brands. Frommer strategically smart because they were tactically inept. $GOOG $YHOO $MSFT

google_logo (Photo credit: keso)

Google (Nasdaq:GOOG) is extending its portfolio of brands. Does that mean Google is fresh out of ideas and needs to acquire some external energy source to drive revenues. Yeah probably. Travel is one of the most researched purchases. Even before the internet consumers checked things out very closely.

Travel vendors advertise extensively and traditionally are one of the top three advertisers. The other two being automotive and consumer electronics. So Google is smart to pick up good assets in this category. What  it also means is that Google has no game when it comes to developing compelling applications so they are forced to use enormous cash resources to buy up what they cannot develop internally.

Strategically they also want to capture the properties before Yahoo (Nasdaq:YHOO) and Bing (Nasdaq:MSFT) pick them up and set up viable beach heads.

Strategically smart because they were tactically inept.

George Gutowski writes from a caveat emptor perspective.

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Yahoo Shareholders Need to Sync up with Marissa Mayer. She wants to Spend not Liquidate. $YHOO

Marissa Mayer (Photo credit: jdlasica)

Yahoo (Nasdaq:YHOO) new boss is doing a review of all businesses. No surprise there. So media comment seems to be mis-focused. Any new boss will review. At Yahoo you will review and then x-ray everything. What some shareholders are freaking about is the potential non return of the some $4 billion cash from the Ali-Baba divestiture. Many investors were expecting a large cash haul after suffering through many Yahoo generated frustrations.

Investors may need to re-align their expectations. You do  not hire someone like a Marissa Mayer and hand her some blanks and expect results. She needs cash to spend on product and probably M&A. I am on record as thinking that Yahoo shares should be a viable currency for acquisitions but you never take cash completely out of the picture.

Great generals did not win by retreat. Attack and audacity have carried more than one day.

Yahoo shareholders will need to reconcile with the new normal under Marisa Mayer. She has been hired to grow Yahoo not liquidate it. Many Yahoo shareholders need to ask themselves why do I own Yahoo? Yahoo investor relations has a large communications job ahead of itself.

George Gutowski writes from a caveat emptor perspective.

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Yahoo Attraction Advantage. $YHOO $GOOG $FB $MSFT $IBM

Deutsch: Logo von Yahoo (Photo credit: Wikipedia)

Yahoo (Nasdaq:YHOO) has a special advantage when attracting talent or new deals. Stock price. Yup you read correctly stock price. Yahoo has been beaten up and down. The downside risk is fairly small. Google is a risk. Facebook is a disaster waiting to splat on the pavement. Microsoft is now a grand daddy tech utility like IBM.

Yahoo has $2 Billion in the bank and another some $6 Billion coming within weeks. That does make for a substantial cash pile but it can be beaten. What you can argue is the price is oversold and will continue to rise in the future. So watch for deals with a substantial stock exchange component. Staff and newly acquired ventures will appreciate the appreciation value of Yahoo and go for a ride. Then the cash can be deployed to build out products and services.

George Gutowski writes from a caveat emptor perspective.

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