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Is Google the next dinosaur?

Bloggers love to depict newspapers as the dinosaurs of the news media. Is Google about to join us? After 13 years of soaring profits, Google had a little reality check in the last quarter. Christmas shopping was not as rosy as Google thought it would be. While profits rose to $2.7 billion in the quarter, that was $300 million less than forecast.

The Associated Press reported: “Google shares plunged $57.67, or 9 percent, to $581.90 in extended trading after the results were announced.”

Europe’s financial mess is part of the problem, but I wonder if social networking will take its toll. Google-Plus has 90 million subscribers — Facebook 800 million or nearly nine times as many.

And Google Plus is hardly a lively place. From the Associated Press: “About 80 percent of Plus users visit the service at least once a week, according to Google. The company is trying to increase the frequency by including recommendations about Plus accounts in its search results, a recent change that has raised questions about whether Google is abusing its position as the Internet’s leading gateway to unfairly promote its own services over its rivals.”

Is Google the next My Space?

The Associated Press report:

What was supposed to be a celebration of the most prosperous quarter in Google’s 13-year history instead turned into a major letdown.

The disappointment sunk in Thursday after Google’s fourth-quarter earnings report showed the Internet search leader fetched less money per click on its ubiquitous online ads.

That came as an unsettling surprise because investors had assumed a surge in online holiday shopping in the U.S. would enable Google Inc. to charge more for its ads. Instead, the average price decreased by 8 percent from the same time in 2010.

Google executives traced part of the decline to technical changes aimed at delivering more ads that attract people’s interest. Those tweaks apparently paid off as the total clicks on Google’s ads increased 34 percent from the previous year.

Most of the trouble seemed to be rooted in Europe, where government debt woes are hurting the economy, said Benchmark Co. analyst Clayton Moran. “I think everyone underestimated how quickly the European online ad market would suffer.”

The weakening euro also converted into fewer dollars during the quarter, another factor that undercut Google.

It all added up to a dramatic slowdown in Google’s earnings growth that alarmed investors. Net income edged up just 6 percent from the same October-December period in 2010, coming off year-over-year increases of more than 25 percent in each of the previous two quarters.

Google shares plunged $57.67, or 9 percent, to $581.90 in extended trading after the results were announced.

The showing could renew Wall Street concerns about Google’s moneymaking prowess under the direction of co-founder Larry Page, who replaced Eric Schmidt as CEO last April. Page took the job with a reputation for being more willing to invest in long-term projects at the expense of short-term profits. In the latest quarter, Google’s operating expenses rose 34 percent from the previous year, outpacing a 25 percent increase in revenue.

If Google’s stock falls as sharply during Friday’s regular trading as it did in Thursday’s extended trading, the shares will be worth slightly less than they were when Page became CEO.

Even before the deceleration in Google’s fourth-quarter earnings, analysts have been fretting that the company’s proposed $12.5 billion acquisition of cellphone maker Motorola Mobility Holdings Inc. will crimp profits. The deal is still awaiting approval from regulators in U.S. and Europe.

Buying Motorola is part of Page’s push to expand Google’s empire beyond the dominant Internet search engine that generates most of the company’s revenue. Much of the money is being poured into Google’s Android software for smartphones, its Chrome web browser, its YouTube video site and a social networking service called Plus that is being quickly built to challenge Facebook.

Page, 38, made it clear he sees no reason to change what he has been doing so far. “I am very happy with our results overall in the quarter,” he told analysts during a Thursday conference call.

More people probably would have shared in his ebullience if not for the curse of great expectations.

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China’s Weibo Guru, Kai-fu Lee

Shu-Ching Jean Chen, Contributor

In September 2009, Kai-fu Lee quit his job as head of Google China, announcing it by way of Weibo, a new micro-blogging service in China that had recently been launched by Sina.com. Three days later, he introduced his new company, Innovation Works, issued press releases and started hiring, all through Weibo. It was a remarkably prescient move.

Two years later, Google abandoned China but Weibo stays. It has became the biggest online sensation in China. About 250 million Chinese internet users, or nearly half of China’s online population of 513 million, signed up on Weibo, up from 63 million a year ago. The spread of smart phones accelerates the fast adoption of Weibo, now more popular than emails. As much as 69.3% of Chinese internet users get online through handsets, only 4% lower than PCs.

Lee becomes the indisputable face of China Inc, as his online popularity soars: he tops the business hall of fame at both the two dominant Weibo service providers, Sina Corp and Tencent. His following of 33.5 million Weibo fans, mainly 20-something, mostly male, tech-savvy students in cities across China, is far larger than that of any other business leaders and nationwide is matched only by half a dozen entertainment celebrities. “Weibo is the most open communication channel in China. Sina and Tencent have enabled lots of Chinese share information through their services,” Lee says, a diligent blogger who posts more than five weibos in a typical day.

Lee started out to attract eyeballs but adjusted and simplified his messages to get across to an increasingly younger crowd as Weibo extends beyond older and professional early-adoptors. His fan base grew more than four times as much in 2011. A constant thread of his weibos is updates and analysis of current events of global high technology, from the latest product offerings (yes, iPhones and iPads) and financials of Google and Apple, his two former employers, to market trends at home, all mixed up with personal interactions with industry movers and shakers.

But his weibos stand out among the pack for lively sharing and honest exchange of views, with good humor and wit, on topics of every possible description. Most recently his fans followed him, through Weibo, to visit Apple’s ornate shop in London; Davos; camel-riding in the Gobi desert; food stalls in Hong Kong; a museum in Zurich; and a dark Swiss back alley where he tweeted about being robbed off everything except his iPhone, an Android handset and a credit card.

Much has been said about Weibo’s power to upend the official order of things, with scoops from netizens, most vividly illustrated in the documentation of the tragic high-speed train crash in Wenzhou in September. Various Chinese government bureaus are also savvy enough to put out their own Weibo postings. In business it opens a valuable direct channel for Chinese corporate titans to connect with the general public. When Warren Buffett and Bill Gates hosted a philanthropy banquet with 50 local tycoon in September 2010, Pan Shiyi, chairman of real estate developer Soho China and an avid micro-blogger, broadcast the event real time through Weibo postings, while a throng of reporters waited outside in the cold.

As with Lee, his company Innovation Works is growing in tandem with his Weibo stature. Of the 43 projects it has invested in (involving everything from e-coupons to Q&A social networking to cloud-based security) through its $180 million fund, 20 of them received first-round funding in sums from $5 million to $12 million. The company will raise a larger fund later this year to keep it going, but the last thing Lee needs to worry about would be the supply of future entrepreneurs, if China can refrain from nipping Weibo’s extraordinary vibrancy in the bud. Here is a sampling of Lee’s views of the world:

Kaifu Lee’s five most popular weibo postings in 2011:

*Reposting weibos is a power, and responsibility. We spread messages, not rumors; observe, not follow blindly; be critical, without violating truth; straightforward, not foul-mouthed. You and I are not just visitors, but active participants. Let weibos be clear and warm, starting with ourselves (October 25, 21:23, 2012).

* A friend who lives near Apple Inc. spoke to me over the phone: “I saw a spectacular rainbow over the sky this morning on my way sending kids to school. No rain. Maybe this is how God commemorates Steve Jobs.” (October 6, 08:07, 2011).

* George W. Bush’s brother, Neil Bush (who tweets on Weibo almost entirely in Chinese on Sina.com) wrote to his daughter on the eve of her wedding to Ralph Lauren‘s son: “Of the men in your life I loved you first.” Chinese fathers can learn from him such expression of profuse compassion (September 8, 20:15, 2011).

* A high-speed train derailed in German in 1998, killing 101 people. Authorities thoroughly investigated and prosecuted those responsible, then built a memorial on the site of the disaster (see attached picture). I support the idea of building a memorial on the site of high-speed train crash in Wenzhou to commemorate victims and serve a warning to future generations, after proper investigations (August 7, 11:31, 2011).

* Many people remain skeptical about my prognosis about patent acquisition driving Google into acquiring Motorola Mobility. Last night over dinner, a former Google board director, agreed with me on the issue. Here are pointers you can follow: patents are very valuable (even though this is something today’s China lacks ); not every company wants to be the next Apple; companies cannot betray their genes, in Google’s case, its open platform; do not believe in conspiracy theories. Lastly, even if you don’t believe this prognosis, I do. August 17, 06:00, 2011

Words of wisdom (these are hugely popular with Chinese fans)

*“Judge a man on how he reacts to failure, not success.” — Martin Luther King (March 27 14:31,2011).

*When you are afraid of trying something new, think about this: Titanic was built by experts; Noah’s Ark was built by beginners (June 24, 10:45, 2011).

*”And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.” –from Steve Jobs’ Stanford commencement address (March 15, 09:15, 2011).

On Celebrities

* One day, people would no longer use iPhones, iPads, Macs. Apple may even lose its luster, but Steve Jobs’ belief and wisdom will survive. His commencement speech at Stanford (“Stay hunger, stay foolish,” “connect the dots,” “follow your heart”‘) will stimulate young people the way those of Churchill, Lincoln and Martin Luther King do (October 6, 19:42, 2011).

* Facebook CEO Mark Zuckerberg talks about his Law of Social Sharing: the amount of stuff you shared today is double the amount you shared a year ago. It creates similar compounding effects much like Moore’s law in semiconductor ( July 8, 11:03, 2011).

*HTC recently caught worldwide attention with its market cap exceeding Nokia’s. HTC chairwoman is Cher Wang, daughter of Taiwanese tycoon Wang Yung-ching. She started from scratches despite hailing from a wealthy family and may accomplish more than her father. She is a model of China’s second generation of family wealth, and an investor in my company Innovation Works ( April 10, 13:47, 2011).

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Google’s FTTH aspirations run into utility pole snag in Kansas City

Google (Nasdaq: GOOG) may have high aspirations for its 1 Gbps Fiber to the Home (FTTH) network in Kansas City, Kan., but those dreams have turned into somewhat of a nightmare as it’s in the midst of a dispute with the local utility company on where it can place its fiber cables on existing electric utility poles.
“We still don’t have an approval of the agreement,” David Mehlhaff, a spokesman for the Kansas City Board of Public Utilities, told The Kansas City Star.

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One of the reasons why Google initially chose Kansas City out of the pool of applicants for its FTTH project was that they were promised that the process to install their cable on the utility poles would be quick.

While the city promised that “when Google is in the restricted BPU electrical supply space,” the zone reserved for power lines, “fees shall not apply,” it will then have to pay the high cost of paying specialists that have the expertise of installing fiber cable close to electrical wires. It is estimated that these journeyman linemen charge hourly rates almost 50 percent higher than technicians who install cable in the zones allocated to telecom and cable.

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