Case Analysis

Google Inc.

Larry Page and Sergey Brin founded Google in 1996.  They developed a new online search engine that was started in their Stanford University dorm room.  This new search engine spread quickly among information seekers globally (Google, Inc., 2009). Developing an innovative way to do search, the company grew quickly through grass root promotion and became the number one people’s choice for search engine. Focusing on improving the ways people connect with information, Google has become a global technology leader and is widely recognized as the “world’s best search engine” because it is fast, accurate and easy to use. Anyone with an Internet connection can access a massive online index of web sites via Google’s search engine (Google, Inc., 2009).

On February 10, 2011, several news organizations reported that Google and Facebook both held low-level talks with Twitter Inc. about purchasing the privately held social networking service. It was reported that Twitter is valued at $8 billion to $10 billion, had 2010 revenues of $45 million, and lost money during 2010. Several researchers and analysts have suggested that Google needs a social networking platform to be competitive with Facebook, which is penetrating the advertising market held by Google. Social networking companies are threatening Google’s business model, and the company was unsuccessful in acquiring the daily coupon website Groupon for $6 billion in 2010. After refusing Google’s offer, Groupon raised $950 million financing on its own, and in 2011 issued the IPO. Another social networking company, LinkedIn, went public by issuing an IPO in 2011. The future direction of Google depends on whether the company is able to enter the social networking market by acquiring Twitter or whether Facebook is successful in acquiring Twitter. Facebook also went public in 2012 and is in a position to raise money to acquire potential competitors. In 2012 Google acquired Motorola to enhance its position in the wireless industry. The company’s decision to enter the wireless industry brings Google in direct competition with Apple. The financial analysts predict that Twitter is ready to go public in late 2013 or 2014. Investors are bullish on the social networking service companies. While the company faces competition from the social networking service, wireless, and technology companies, its strength and opportunities are plentiful. The questions are—what is next for Google? Is the company in a financial position to raise enough capital to acquire or develop products and services to compete effectively?

The goal of this assignment is to analyze Google Inc. using the financial analysis tools you have been exposed to in both the textbook and classroom, and prepare a summary of your findings using the following format.

Case Analysis Video:

http://www.youtube.com/watch?v=JtaikJOZK-w

Google’s Financial Statements

Other useful links for the assignment:
Google’s Annual Report
Google’s Technology
Google’s Products and Service
Google and Advertising
Business Model

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