The Greediest Company on Wall Street?

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The Greediest Company on Wall Street? By Jason Stutman | Monday, January 27th, 2014 Most of us know the old parable about how to catch a monkey — put some peanuts in a jar with an opening large enough for its hand but too small for its fist. The idea is that the monkey will reach in but be too greedy to let go of the peanuts, making it vulnerable to capture. I've heard a few variations with African natives either using coconuts on a string or digging holes into the earth and setting up an ambush from behind — pretty clever, if you ask me. I'm not completely sure whether or not you can actually catch a monkey this way. I assume there's at least some truth in all this. But it's not all that important either way. You probably don't really care about catching wild monkeys, and neither do I — this is simply a cautionary tale about hunger and greed. When it comes to making money, there's an incredibly fine line between good business and greedy business, and I dare to say Google Inc. (NASDAQ: GOOG) is straddling it. Advertisement This emerging technology just handed early investors over 4,985%... and it's getting ready to do it again At this very moment, an emerging technology is taking the world by storm, changing lives, and making early investors rich. In fact, one stock just soared from $10 to $500, handing savvy investors a whopping 5,000%. That's good enough to turn a $25,000 investment into $1.25 million. The best part? This is only the tip of the iceberg. In fact, in the following video, I'll show you three stocks that have absolutely explosive upside potential and the ability to turn every $1 you invest into $5... $10... even $15 or more. Click here now to learn about these three stocks. In December, Google announced its acquisition of Boston Dynamics, a robotics and engineering company best known for developing products with military applications. One of the company's better-known robots is the Alpha Dog, a rough terrain robot designed to carry up to 400 lbs. of gear for soldiers on foot. What does this have to do with Google's core business? Your guess is as good as mine. A month later, Google announced its acquisition of Nest, a home automation company developing thermostats and smoke detectors that give users control from their mobile devices. Not too long after, Google introduced a new project to develop contact lenses that would measure glucose levels for diabetics. That's right — Google is not only sticking its big, fat fists into robotics and the Internet of Things but into health care as well. And those recent headlines are just the half of it. Google has set its sights on fiber-optic Internet service, self-driving cars, smartphones, wearable devices, social media... the list goes on. Yet after several years and billions of dollars spent on alternative side projects, Google still receives over 90% of its revenue from advertising. Now don't get me wrong — I'm not saying Google shouldn't be spending any money on R&D or M&As. In fact, Google's aggressive approach to acquisitions during the first decade of this millennium played out incredibly well. Between 2000 and 2010, Google made many key software-based acquisitions including Android, YouTube, and Applied Semantics, which eventually became the backbone for Google AdSense. By and large, it was a decade of targeted buyouts that either expanded Google's advertising capability or buffed its security. For a while, these acquisitions fit neatly into Google's core business model of advertising. Yet in 2011, Google decided to spend $12 billion on Motorola and branched out into the world of consumer hardware — a segment that continues to hurt the company's bottom line. Advertisement Have You Heard of "Black Solar"? A tiny $1.00 tech firm in Upstate New York just did the impossible... They unlocked the secret to harnessing solar energy by doubling the power output and cutting the cost in half. This technology is so efficient and affordable, electric companies are already shaking in their boots. Before the first big ticket contract comes, doubling the share price, click here to see why it's all the rage. Not All Hats Fit By 2013, more than half of Google's yearly acquisitions were integrated into its experimental arm Google X. From gesture recognition to wind turbines to humanoid robots, Google is treating the technology industry like a Hasbro Monopoly board and scooping up just about anything it can get its hands on. Of course, there are many investors who see this as a sign of future growth, but I wouldn't be so sure. Google's success at generating advertising revenue won't necessarily translate to everything in the realm of technology. Now, I won't deny Google has a deep pipeline of exciting products in development. However, we've yet to see any commercial product — let alone a profitable one — stem from Google's experimental arm. It's no secret that Google can build some exciting hardware, but we still haven't seen a hint of promising ROI on these products. Driverless cars are fun to talk about, but $220,000 in equipment costs doesn't exactly bode well for the consumer market. Likewise, Google Glass will be a tough sell at a predicted retail cost of $600. The reality is it's impossible to put a price on R&D that has nothing to do with a company's core business model. Until we see some solid revenue generation in Google's hardware segment, I wouldn't recommend getting caught up in the all the hype. On the Back Burner By now, I may be coming off as a bit of a grump or naysayer, but so be it. I disagree with how Google has been allocating its massive cash hoard, plain and simple. Google is the single largest company on the market to not share its earnings with its shareholders. Instead, Google is pouring billions into overly ambitious projects in which it has virtually no experience. Of course, l can only speak for myself here, but this all comes off as a bit arrogant and selfish. This is a firm with a $383.6 billion market cap and $54.7 billion in revenue, yet a $0 dividend. When you factor in growing internal product failures, $12 billion in annual income, and $18 billion in cash flow, it seems strange that Google continues to give its investors the cold shoulder. Normally, this kind of financial positioning would indicate a share buyback or increased dividend yield, but this just may not be the case with Google. In terms of a buyback, Google's P/E of 31.31 doesn't exactly put shares in the discount territory. A dividend yield is certainly the more likely scenario, but I wouldn't count on that either just yet. Google's recent hardware binge has made it clear the company has bigger plans than ad revenue. Whether this will all pan out is anyone's guess, but the company will likely hold onto as much cash as possible for strategic purposes if it truly wishes to branch out into robotics and automation. I predict Google will not announce a dividend this year, nor will it release a profitable piece of hardware. Advertising and Google-Owned Site revenue will both continue to grow, with the latter growing in share. Unless we see a surprise dividend or clear success from Google Glass, I'll be staying away in 2014. Turning progress to profits,    Jason Stutman  @JasonStutman on Twitter Energy and Capital's tech expert, Jason Stutman has worked as an educator in mathematics, technology, and science... Before joining the Energy and Capital team, Jason served on multiple technology development committees, writing and earning grants in educational and behavioral technologies. Jason offers readers keen insights on prominent tech trends while exposing otherwise unnoticed opportunities. I liked this article | I did not like this article Follow Energy and Capital on The Bottom Line Related Articles Did Edward Snowden Kill Google (NASDAQ: GOOG)? Five Top-Performing Tech Stocks for 2014 OLED Investing Opportunities Recently... What Keeps the Prince Up at Night I Just Bought 400 Shares of THIS Stock South Texas Oil Stocks with a Kick A 3D-Printed What!? Where Oil Workers Drop $60 for a Steak

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