Google Results Suck: What Does This Mean for Other Tech Stocks?

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(Written by Rebecca Lipman. List compiled by Eben Esterhuizen, CFA. Insider data sourced from Yahoo! Finance.)

(Written by Rebecca Lipman. List compiled by Eben Esterhuizen, CFA. Insider data sourced from Yahoo! Finance.)

 

Google’s (GOOG) net revenue and earnings, though strong, fell short of analysts’ expectations. The news was released on Thursday and was followed by a 8.38% drop in share price on Friday.

Google’s fourth-quarter profit, excluding the cost of stock options and the related tax benefits, was $9.50 a share, up from $8.75 a year ago. Analysts had expected $10.49 a share. Net revenue climbed to $8.13 billion from 6.37 billion a year ago. Analysts had expected net revenue of $8.4 billion

The New York Times reports, “Financial results were hurt by unfavorable foreign exchange rates, increased spending by Google, changes the company made to ad formats and the sale of more mobile ads, which cost less.”

Google CEO Larry Page says he is far from disappointed with Google’s performance. “I’m very happy with our results,” he said on a conference call with analysts. “Google had a very strong fourth quarter… 2012 promises to be a fantastic year.”

Tech Industry on High Alert

What’s noteworthy about Google’s negative earnings surprise is that Google rarely ever disappoints, and because the fourth quarter is usually the strongest, reports New York Times.

Because of Google’s place on a pedestal in the tech industry, can we assume Google’s disappointing data will be the bellwether for the rest of the tech industry’s fourth quarter earnings?

Business Section: Investing Ideas

So, does this mean Google’s days of rapid growth are coming to an end? And more importantly, will investors re-allocate their funds to tech companies that have more attractive growth prospects?

For ideas, we collected data on insider transactions, and identified a list of high growth tech stocks that have seen significant insider buying over the last six months.

Theoretically, insiders know more about their companies than anyone else. So if they’re using their own cash to buy the shares of their employers, you better pay close attention.

Insider executives are optimistic on the outlook of these high-growth tech companies–do you agree?

Analyze These Ideas (Tools Will Open In A New Window)

1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. Visualize annual returns for all stocks mentioned

List sorted by projected earnings growth over the next five years.

1. PROS Holdings, Inc. (PRO): Provides pricing and margin optimization software worldwide. EPS projected to grow by 25.0% over the next five years. Over the last six months, insiders were net buyers of 8,500 shares, which represents about 0.04% of the company's 19.95M share float.

2. Aruba Networks, Inc. (ARUN): Provides distributed enterprise networks that securely connect local and remote users to corporate information technology resources worldwide. EPS projected to grow by 24.66% over the next five years. Over the last six months, insiders were net buyers of 444,930 shares, which represents about 0.44% of the company's 100.39M share float.

3. Universal Display Corp. (PANL): Engages in the research, development, and commercialization of organic light emitting diode (OLED) technologies and materials for use in flat panel display, solid-state lighting, and other product applications. EPS projected to grow by 24.50% over the next five years. Over the last six months, insiders were net buyers of 406,907 shares, which represents about 1.3% of the company's 31.41M share float.

4. ShoreTel, Inc. (SHOR): Provides Internet protocol (IP) telecommunications systems for enterprises in the United States. EPS projected to grow by 22.50% over the next five years. Over the last six months, insiders were net buyers of 112,509 shares, which represents about 0.27% of the company's 41.05M share float.

5. Demand Media, Inc. (DMD): Operates as a content and social media company in the United States. EPS projected to grow by 20.70% over the next five years. Over the last six months, insiders were net buyers of 14,614 shares, which represents about 0.05% of the company's 32.04M share float.

6. Cirrus Logic Inc. (CRUS): Develops high-precision analog and mixed-signal integrated circuits (ICs). EPS projected to grow by 20.0% over the next five years. Over the last six months, insiders were net buyers of 152,115 shares, which represents about 0.24% of the company's 63.37M share float.

7. DG FastChannel, Inc. (DGIT): Provides digital technology services that enable the electronic delivery of advertisements, syndicated programs, and video news releases to traditional broadcasters, online publishers, and other media outlets. EPS projected to grow by 20.0% over the next five years. Over the last six months, insiders were net buyers of 37,000 shares, which represents about 0.16% of the company's 23.73M share float.

8. Internap Network Services Corp. (INAP): Provides information technology (IT) infrastructure services. EPS projected to grow by 20.0% over the next five years. Over the last six months, insiders were net buyers of 68,915 shares, which represents about 0.14% of the company's 48.46M share float.

9. InfoSpace Inc. (INSP): Develops search tools and technologies that assist consumers with finding content and information on the Internet. EPS projected to grow by 20.0% over the next five years. Over the last six months, insiders were net buyers of 84,178 shares, which represents about 0.26% of the company's 32.13M share float.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , Technology


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