Google Inc (GOOG), Microsoft Corporation (MSFT): Does This Search Giant Lack Diversification?

Google EPS Diluted (TTM) data by YCharts

The company carries more than $54 billion in cash on its books, with only around $8 billion in debt. A current ratio of over 4 also attests to the company’s financial strength and highly liquid balance sheet. But will this strength continue into the future?

Domestic threats

How will Microsoft Corporation (NASDAQ:MSFT) accomplish this growth? Maybe by targeting a younger demographic. By offering an ad-free version of Bing for schools, Microsoft may be onto something. As Stefan Weitz, Microsoft Corporation (NASDAQ:MSFT)’s director of search said:  “We hope that we demonstrate the quality of Bing to teachers and students and also their parents, and once they see how good it is, we hope to see increased usage outside of schools too.”

Microsoft Corporation (NASDAQ:MSFT) would love to take share from Google moving forward, and this seems like a viable strategy, especially at a time when people are worrying about how companies like Google track their users to target them for display ads.

The bottom line
Google is a rock-solid company, but it needs to diversify its revenue streams. As the situation in China shows, relying solely on ads doesn’t always work. There’s also the possibility that competitors may one day erode Google’s market share domestically as well.

Monetizing Google Fiber may be a step in the right direction. Google offers its Internet service for free in around 12 different markets, but plans to charge for it in the future. Google wants to offer three different price plans, from free to $120 per month, which would provide faster Internet speeds and access to hundreds of Google TV channels in high definition. This may open new revenue streams for the company and help it diversify its business going forward.

The article Does This Search Giant Lack Diversification? originally appeared on Fool.com is written by Joseph Harry.

Joseph Harry owns shares of Microsoft. The Motley Fool recommends Baidu and Google. The Motley Fool owns shares of Baidu, Google, and Microsoft. 

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