Home » Black Swans » Google Diagnosis = Manic Depressive The Revenue Model is Broken. $GOOG $RRD $YHOO

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

Old RR Donnelley printing building.

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

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