"
data-check-event-based-preview=""
data-is-vertical-video-embed="false"
data-network-id=""
data-publish-date="2019-06-14T06:28:41Z"
data-video-section="business"
data-canonical-url="https://www.cnn.com/videos/business/2019/06/14/google-ceo-sundar-pichai-reacts-to-growing-calls-to-break-up-big-tech-orig.cnn-business"
data-branding-key=""
data-video-slug="Google CEO sundar pichai reacts to growing calls to break up big tech orig"
data-first-publish-slug="Google CEO sundar pichai reacts to growing calls to break up big tech orig"
data-video-tags="alphabet inc,antitrust and trade law,business executives,business figures,business, economy and trade,companies,crime, law enforcement and corrections,criminal investigations,criminal law,economic policy,economy and economic indicators,google inc,labor and employment,law and legal system,misc people,poppy harlow,sundar pichai,technology,trade and development,trade regulation and policy,workers and professionals"
data-details="">
Video Ad Feedback
Google CEO reacts to growing calls to break up big tech (2019)
"
data-check-event-based-preview=""
data-is-vertical-video-embed="false"
data-network-id=""
data-publish-date="2019-06-14T06:28:41Z"
data-video-section="business"
data-canonical-url="https://www.cnn.com/videos/business/2019/06/14/google-ceo-sundar-pichai-reacts-to-growing-calls-to-break-up-big-tech-orig.cnn-business"
data-branding-key=""
data-video-slug="Google CEO sundar pichai reacts to growing calls to break up big tech orig"
data-first-publish-slug="Google CEO sundar pichai reacts to growing calls to break up big tech orig"
data-video-tags="alphabet inc,antitrust and trade law,business executives,business figures,business, economy and trade,companies,crime, law enforcement and corrections,criminal investigations,criminal law,economic policy,economy and economic indicators,google inc,labor and employment,law and legal system,misc people,poppy harlow,sundar pichai,technology,trade and development,trade regulation and policy,workers and professionals"
data-details="">
Video Ad Feedback
Google CEO reacts to growing calls to break up big tech (2019)
"
data-check-event-based-preview=""
data-is-vertical-video-embed="false"
data-network-id=""
data-publish-date="2019-06-06T22:57:37Z"
data-video-section="business"
data-canonical-url="https://www.cnn.com/videos/business/2019/06/06/google-facebook-duopoly-explr-zw-orig.cnn"
data-branding-key=""
data-video-slug="google facebook duopoly explr zw orig"
data-first-publish-slug="google facebook duopoly explr zw orig"
data-video-tags="alphabet inc,business and industry sectors,business, economy and trade,companies,democracy,electronic commerce,facebook,forms of government,google inc,government and public administration,journalism and news media,marketing and advertising,marketing and advertising channels,media industry,online advertising,online and home shopping,politics,retail and wholesale trade"
data-details="">
Video Ad Feedback
Google and Facebook are great at selling ads. It's terrible for journalism
"
data-check-event-based-preview=""
data-is-vertical-video-embed="false"
data-network-id=""
data-publish-date="2018-11-16T19:39:35Z"
data-video-section="business"
data-canonical-url="https://www.cnn.com/videos/business/2018/11/16/is-google-a-monopoly.cnn-business"
data-branding-key=""
data-video-slug="Is Google a monopoly?"
data-first-publish-slug="Is Google a monopoly?"
data-video-tags="alphabet inc,antitrust and trade law,business and industry sectors,business, economy and trade,companies,computer science and information technology,economic policy,economy and economic indicators,google inc,internet and www,internet software and applications,law and legal system,search engines,software and applications,technology,trade and development,trade regulation and policy"
data-details="">
"
data-check-event-based-preview=""
data-is-vertical-video-embed="false"
data-network-id=""
data-publish-date="2019-03-21T15:13:28Z"
data-video-section="business"
data-canonical-url="https://www.cnn.com/videos/business/2019/03/21/this-is-how-facebook-kills-its-competition.cnn-business"
data-branding-key=""
data-video-slug="This is how Facebook kills its competition"
data-first-publish-slug="This is how Facebook kills its competition"
data-video-tags="companies,facebook,internet and www,social media,technology"
data-details="">
"
data-check-event-based-preview=""
data-is-vertical-video-embed="false"
data-network-id=""
data-publish-date="2018-10-12T16:15:59Z"
data-video-section="business"
data-canonical-url="https://www.cnn.com/videos/business/2018/10/12/amazon-anti-trust-orig.cnn-business"
data-branding-key="united-states-of-amazon"
data-video-slug="Amazon anti trust orig"
data-first-publish-slug="Amazon anti trust orig"
data-video-tags="amazon.com inc,antitrust and trade law,business, economy and trade,companies,economic policy,economy and economic indicators,law and legal system,trade and development,trade regulation and policy"
data-details="">
"
data-check-event-based-preview=""
data-is-vertical-video-embed="false"
data-network-id=""
data-publish-date="2019-05-22T13:49:44Z"
data-video-section="business"
data-canonical-url="https://www.cnn.com/videos/business/2019/05/22/qualcomm-us-antitrust.cnn-business"
data-branding-key=""
data-video-slug="qualcomm us antitrust"
data-first-publish-slug="qualcomm us antitrust"
data-video-tags="antitrust and trade law,business and industry sectors,business, economy and trade,companies,computer equipment,computer peripherals,computer science and information technology,consumer electronics,consumer products,decisions and rulings,economic policy,economy and economic indicators,electronics,law and legal system,misc people,mobile and cellular telephones,mobile technology,modems,qualcomm inc,samuel burke,smartphones,technology,trade and development,trade regulation and policy,trial and procedure"
data-details="">
"
data-check-event-based-preview=""
data-is-vertical-video-embed="false"
data-network-id=""
data-publish-date="2018-10-08T14:07:15Z"
data-video-section="business"
data-canonical-url="https://www.cnn.com/videos/business/2018/10/05/amazons-ad-future-orig.cnn-business"
data-branding-key="united-states-of-amazon"
data-video-slug="Amazons ad future orig"
data-first-publish-slug="Amazons ad future orig"
data-video-tags="alphabet inc,amazon.com inc,business and industry sectors,business, economy and trade,companies,facebook,google inc,marketing and advertising"
data-details="">
"
data-check-event-based-preview=""
data-is-vertical-video-embed="false"
data-network-id=""
data-publish-date="2019-05-13T16:43:58Z"
data-video-section="business"
data-canonical-url="https://www.cnn.com/videos/business/2019/05/13/apple-app-store-supreme-court.cnn-business"
data-branding-key=""
data-video-slug="apple app store supreme court"
data-first-publish-slug="apple app store supreme court"
data-video-tags="antitrust and trade law,apple inc,business and industry sectors,business, economy and trade,companies,computer science and information technology,economic policy,economy and economic indicators,government and public administration,government bodies and offices,government organizations - us,law and legal system,mobile apps,mobile technology,politics,software and applications,technology,trade and development,trade regulation and policy,us federal court system,us federal government,us supreme court"
data-details="">
Video Ad Feedback
iPhone owners can sue Apple over App Store monopoly
"
data-check-event-based-preview=""
data-is-vertical-video-embed="false"
data-network-id=""
data-publish-date="2018-12-17T18:42:37Z"
data-video-section="business"
data-canonical-url="https://www.cnn.com/videos/business/2018/12/17/tim-wu-this-is-how-you-break-up-facebook-orig.cnn-business"
data-branding-key=""
data-video-slug="Tim Wu: This is how you break up Facebook orig"
data-first-publish-slug="Tim Wu: This is how you break up Facebook orig"
data-video-tags="antitrust and trade law,business and industry sectors,business, economy and trade,communications law and policy,companies,computer and internet law,curricula,economic policy,economy and economic indicators,education,education systems and institutions,facebook,graduate and professional schools,higher education,internet regulation,law and legal system,legal education,legal services,market monopolies,net neutrality,technology,telecommunications industry,trade and development,trade regulation and policy"
data-details="">
Google got rid of its “don’t be evil” motto last year. For the sake of investors, it may want to try out a new slogan: “Don’t be boring.”
Google parent company Alphabet
(GOOGL) has become one of the most boring Big Tech companies on the market, to the detriment of its stock. Alphabet
(GOOGL) shares are up about 9% this year. That’s not awful of course, but the stock is lagging the rest of the so-called FAANG stocks in a major way.
Facebook
(FB) is up more than 50% so far in 2019. Apple
(AAPL) and Amazon
(AMZN) are up about 30% while Netflix
(NFLX) is up more than 40%.
Alphabet has fallen behind the broader market too. The S&P 500 is up about 19% while the Nasdaq has surged nearly 25%. What’s more, Alphabet shares are actually down nearly 4% over the past 12 months.
Why has Alphabet underperformed?
Is Alphabet “old” tech or “new” tech?
Revenue growth has slowed. Concerns about more tech regulation in Washington could also hurt its YouTube unit.
Many of Alphabet’s non-core businesses continue to lose money, leading to worries that the company is a one-trick pony named Search. Its non-core businesses include its so-called Other Bets companies, which include self-driving unit Waymo, life sciences subsidiary Verily and drone delivery service Wing.
And perhaps the company’s biggest problem: It’s hard to figure out if Alphabet is still a high growth momentum stock or a mature old tech firm.
Alphabet’s earnings are expected to grow about 14% a year, on average, for the next few years. That’s certainly still respectable but it’s lower than the projected growth rates of more dynamic companies like Facebook, Amazon and Netflix.
So it might be time for Alphabet to start paying a dividend like Microsoft, Apple, IBM
(IBM), Cisco
(CSCO) and other tech companies. It clearly can afford to do so. Alphabet ended the first quarter with a whopping $113.5 billion in cash on its balance sheet.
But the company probably doesn’t want to throw in the towel and admit it has nothing better to do with its cash. Facebook, Amazon and Netflix don’t pay dividends.
Alphabet did not have a comment for this article, instead referring CNN Business to the portion of its most recent annual report in which the company reiterated that “we have never declared or paid any cash dividend on our common or capital stock. We do not expect to pay any cash dividends in the foreseeable future.”
Why Alphabet stock could stage a comeback
Some of the worries that have held the stock back may be overdone.
The company’s recent push to promote new advertising tools for professional content creators could be good news for Alphabet, said Nomura Instinet analyst Mark Kelley in a report Wednesday.
Ads on the YouTube channels for big media companies have higher rates and are considered “brand safe” for marketers, Kelley argued.
Alphabet’s plans to feature ads on Google’s relaunched news feed — called Discover — on the Google mobile home page could also be attractive to marketers given that the ads could reach up to about 800 million users worldwide, Kelley said.
Alphabet will report its second quarter earnings on July 25. If the company allays some of the concerns about a slowdown in its sales and earnings, then the stock could finally start performing as well as the rest of the FAANG companies.
Breakup fears may be overdone
Investors shouldn’t be too concerned about Alphabet being broken up — or even severely penalized — by US antitrust regulators, said Jefferies analyst Brent Thill.
“US regulators focus on ‘consumer welfare’ so it might be hard to argue that lower prices or better products are hurting consumers,” Thlll wrote, even though some argue that Alphabet and other big techs may be harming smaller rivals.
Even in the unlikely event that tech giants were broken up, Alphabet could still wind up doing quite well, Thill added.
“Breakups are not always a bad thing for stocks,” he wrote, adding that the sum of the various parts at Alphabet could even be higher than the firm’s current combined value.
