Google Inc (GOOG): Here’s Why It Is A Dominant Force In The World of Tomorrow

Weaknesses:

High valuation:

Currently, Google Inc (NASDAQ:GOOG) carries a price to earnings ratio of 24.85, a price to book ratio of 3.65, and a price to sales ratio of 5.21; all of which indicate a company trading with a high valuation on a relative basis to the overall market.

Lack of dividend:

Google has in no time in the company’s past paid out a dividend, and has not expressed any plans to do so in the future.

Cost of revenue outgrowing revenue:

From 2010 to 2012, the company’s revenue has grown 60.51%, while the company’s cost of revenue has grown 64.88%; a troubling trend which is a major weakness of the company

Opportunities:

Acquisitions:

In May 2012, Google acquired Motorola Mobility Holdings; the company has a long history of aggressive acquisitions, and further acquisitions could introduce new and innovative technologies to the company which could fuel growth.

Mobile search segment:

The mobile search industry is among the fastest growing in the world, with both revenue per search and total Internet searches per mobile device expanding aggressively, and further growth in this industry could present incredible opportunity for the company to take advantage of.

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  YouTube segment:
  YouTube has, for years, been among the company’s fastest growing segments, with both revenue per page view and number of users growing at an incredible pace, and further growth in the YouTube segment could present an opportunity for the company to optimize this revenue stream.

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  Explosive growth from gmail:
  Gmail, while only equating for 1.10% of overall business, has been among the company’s fastest growing segments, and a continuation of this trend seems inevitable and should fuel overall company growth slightly.

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  Gaining market share:

  From December 2012 to January 2013, Google acquired 0.3% of the United States search industry, and over the past years, it has seen an incredible rise to the top position and further gains in market share could improve the company’s pricing power in terms of advertisements.