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Showing posts with label Internet. Show all posts
Showing posts with label Internet. Show all posts
Friday, July 30, 2010
Internet Valuation
Valuation multiples for Internet stocks
Note: Click on the graphic 2x for a legible view.
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Note: Click on the graphic 2x for a legible view.
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Thursday, December 18, 2008
Weakening Dollar. Should Tech Estimates Be Adjusted Upward?
Now that the dollar has fallen for the past two weeks against the Euro and the British Pound, could this mean that Tech companies that derive a significant percentage of revenues from outside the U.S., are likely to post stronger than expected results for the current quarter!
That depends on how much of their revenues is derived in December compared to the other two months of the quarter. For companies like eBay, Amazon, and Google (all three generate close to 50% or more of revenues outside the U.S.), the percentage of revenues derived in December is significant both domestically and internationally. The same is not true for the software and semiconductor companies, whose revenues are more evenly paced throughout the quarter. Those companies derive anywhere from 50%-75% of their revenues outside the U.S.
Almost every Tech company reduced guidance for the quarter partly due to the stronger dollar (but largely due to the economy). As well, analysts reduced their estimates for the quarter due in part to the stronger dollar.
Most journalist focus on the absolute revenue and profit numbers while the more astute analysts will analyze results ex the FX effect. But the overall headline number is what will grab attention and what will drive the stocks up or down initially.
I doubt analysts will adjust their numbers for the weakening dollar for three weeks of the quarter. If the Nets get a bump in revenues and profits due to the weak dollar, then the likelihood of a beat vs. Street seems high. Not so for the software and semiconductor companies.
So what about 2009 guidance and estimates? Not sure CFOs will factor in the weakening of the dollar into their guidance for the year. But they should be thinking about it.
The Wall Street Journal stated that the Fed has "undercut any advantage to holding the dollar versus another currency" and that the quantitative easing suggested by the Fed " will flush the system with more dollars, essentially decreasing the currency's underlying value". The two together spells significant weakness for the dollar going forward, according to Tom Fitzpatrick, the head of currency strategy at Citigroup.
While I am not sure how to play this one yet for equities, I will definetly watch for how the Street and the companies adjust numbers for 2009 to account for the weak dollar. That is off course balancing that with what could be continued economic weakness in Europe and other areas outside the U.S.
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That depends on how much of their revenues is derived in December compared to the other two months of the quarter. For companies like eBay, Amazon, and Google (all three generate close to 50% or more of revenues outside the U.S.), the percentage of revenues derived in December is significant both domestically and internationally. The same is not true for the software and semiconductor companies, whose revenues are more evenly paced throughout the quarter. Those companies derive anywhere from 50%-75% of their revenues outside the U.S.
Almost every Tech company reduced guidance for the quarter partly due to the stronger dollar (but largely due to the economy). As well, analysts reduced their estimates for the quarter due in part to the stronger dollar.
Most journalist focus on the absolute revenue and profit numbers while the more astute analysts will analyze results ex the FX effect. But the overall headline number is what will grab attention and what will drive the stocks up or down initially.
I doubt analysts will adjust their numbers for the weakening dollar for three weeks of the quarter. If the Nets get a bump in revenues and profits due to the weak dollar, then the likelihood of a beat vs. Street seems high. Not so for the software and semiconductor companies.
So what about 2009 guidance and estimates? Not sure CFOs will factor in the weakening of the dollar into their guidance for the year. But they should be thinking about it.
The Wall Street Journal stated that the Fed has "undercut any advantage to holding the dollar versus another currency" and that the quantitative easing suggested by the Fed " will flush the system with more dollars, essentially decreasing the currency's underlying value". The two together spells significant weakness for the dollar going forward, according to Tom Fitzpatrick, the head of currency strategy at Citigroup.
While I am not sure how to play this one yet for equities, I will definetly watch for how the Street and the companies adjust numbers for 2009 to account for the weak dollar. That is off course balancing that with what could be continued economic weakness in Europe and other areas outside the U.S.
Read More!
Monday, December 8, 2008
Internet Ad Spend Up 18% in 2009; To Rise To 16% of Ad Mix by 2011
At the UBS Media Conference, three industry advertising forecasters, Bob Coen of IPG’s MAGNA, Publicis’ ZenithOptimedia, and WPP's GroupM, provided updated advertising forecasts for 2009. All three revised downward their estimates due to the economy.
Surprisingly, they called for strong growth in Internet advertising, with Zenith providing the most optimistic growth of 18% growth over 2008 and GroupM providing growth of 10%. With the challenges that we are currently seeing in display and classified online advertising, the 18% growth estimate seems extremely aggressive to me.
My guess is that the true growth number comes in at around the low-teens, being largely supported by online search, which itself may come under pressure. The truth is, no one really knows what awaits us in 2009, and any sort of forecasts today are just numbers on paper, and cannot be assigned much weight.
Another interesting forecast is from Zenith, who is calling for global Internet advertising to grow to 15.6% the total advertising pie in 2009. Not sure where the number is today but I assume it is around 7% so they are calling for a significant ramp in Internet spend, or for a significant decline in the other forms of advertising, while Internet advertising holds steady. Either way, that number seems aggressive to me and my own thinking suggests that by 2011, Internet advertising will inch up towards 10% of the mix.
Key Highlights for 2009:
• Zenith projects US ad spending down 6.2%
• GroupM projects U.S. ad spending down 3.2%
• Coen projects a 7.6% decline in local U.S. advertising vs. a 3% decline for U.S. national
• The three provided global forecasts of between -0.2% and -0.3%
• Global Internet Advertising: Zenith called for 18% YoY growth; GroupM is
looking for 10% vs. 22% in 2008
• Zenith projects that Internet advertising will represent 15.6% of global spend in
2011
• TV spending should hold up under pressure
• Ad spending faces difficult comps due to Olympics and political ad spending
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Surprisingly, they called for strong growth in Internet advertising, with Zenith providing the most optimistic growth of 18% growth over 2008 and GroupM providing growth of 10%. With the challenges that we are currently seeing in display and classified online advertising, the 18% growth estimate seems extremely aggressive to me.
My guess is that the true growth number comes in at around the low-teens, being largely supported by online search, which itself may come under pressure. The truth is, no one really knows what awaits us in 2009, and any sort of forecasts today are just numbers on paper, and cannot be assigned much weight.
Another interesting forecast is from Zenith, who is calling for global Internet advertising to grow to 15.6% the total advertising pie in 2009. Not sure where the number is today but I assume it is around 7% so they are calling for a significant ramp in Internet spend, or for a significant decline in the other forms of advertising, while Internet advertising holds steady. Either way, that number seems aggressive to me and my own thinking suggests that by 2011, Internet advertising will inch up towards 10% of the mix.
Key Highlights for 2009:
• Zenith projects US ad spending down 6.2%
• GroupM projects U.S. ad spending down 3.2%
• Coen projects a 7.6% decline in local U.S. advertising vs. a 3% decline for U.S. national
• The three provided global forecasts of between -0.2% and -0.3%
• Global Internet Advertising: Zenith called for 18% YoY growth; GroupM is
looking for 10% vs. 22% in 2008
• Zenith projects that Internet advertising will represent 15.6% of global spend in
2011
• TV spending should hold up under pressure
• Ad spending faces difficult comps due to Olympics and political ad spending
Read More!
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