The business is a dynamo. The stock is a pipe dream, says Fortune's Geoff Colvin

We have some back up in our Common Sense squad: not everything is lost in insanity so far:

http://money.cnn.com/magazines/fortune/fortune_archive/2007/08/06/100141308/index.htm?source=yahoo_quote

Once the crowd will realise that they are living on "borrowed future" which will never come hang over will be ugly.

Google Exec to Pay $700,000 in SEC Case

Why do we need enemies if we have such "freinds":
"SAN FRANCISCO (AP) -- Google Inc.'s top in-house lawyer, David Drummond, has agreed to pay $700,000 to settle a Securities and Exchange Commission complaint alleging he helped mislead investors while overseeing the finances of his previous employer, SmartForce."..."The SEC had alleged Drummond helped SmartForce exaggerate its revenue by $113.6 million and its profit by $127 million during a 3 1/2-year period ending in mid-2002. At the time, Drummond was SmartForce's chief financial officer."

Google GOOG Earnings and Growth are Falling further

The most important ring bell for all Google shareholders should be falling by 12% margin from almost constant before 33% to 29% of revenue. With increase in revenue of 58% Y/Y Google demonstrated falling growth rate of -25% Y/Y. Google network growth is falling even more faster by -38% Y/Y due to heating up competition. Net Income actually fall from 1billion to 0.9 billion comparing to the 1st q 2007. Total cost and Expenses are growing 116% faster then revenue growth rate Q/Q. Sales per head is down by -6%. With all this deteriorating fundamentals investors still were ready to pay last Thursday 548.59 which brings Google to valuation of P/S=12.9, P/E=47, P/FCF=74. Even if Google could justify P/FCF=40 with slowing growth and falling margin share price has to have a dive into 300.00 territory. The problem here could be that on the way down support of the company could be devastated by losses and Google could become victim of its own success. Licencing and other revenue is still around 1% of total revenue and falling in absolute figures. All risks of one trick pony related to Search business where competitors literally one click away remains. This results are second in line with deteriorating fundamentals after slowing growth and earnings trends in Q1 2007 discussed here. How long could management be allowed to run the company based not on fundamentals but on "competitive landscape" will depend on its shareholders. This analyses is based on Google own published report.

Google GOOG to trade below USD450.00 tomorrow

Finally crowd will noticed that growth is slowing and company can not meet overinflated expectations. Will it survive its own success? More will be posted tomorrow last 1Q 2007 figures are here: http://sufiy.blogspot.com/2007/07/google-goog-earnings-growth-rate-is.html

http://finance.yahoo.com/q?s=GOOG

"Google (GOOG - Cramer's Take - Stockpickr - Rating) shares were dropping sharply late Thursday after the Net giant shocked Wall Street with a second-quarter earnings shortfall"

End of Empire and USD - PGM as store of Ultimate Value, Rising of New Powers and Leap Frog into consumption of basic Necessities.

OK, we have the situation as we have discussed many times before: US Dollar is a chosen Victim of all ill managed things imaginable in Shrinking Empire. How can we put this knowledge into work: I think it is still very up to date piece to sharpen your saw:

http://sufiy.blogspot.com/2007/05/three-most-important-things-in.html



P.S. Remember: Investing is a process of giving away your money to the Stranger hoping that he is more clever then you.

http://sufiy.blogspot.com/2007/07/gold-and-metals-credit-suisse-issued.html

US Dollar SUBPRIME CURRENCY: what all it means and how to Play IT

How to hedge your assets against US Dollar USD decline and Subprime story development:

http://sufiy.blogspot.com/search?q=USD

US Dollar is Alpha and Omega of this Decade Trade

Lundin Mining LUN.to CAD25.00 as Take Over Target

Lots of upside in mining takeouts
Leonard Zehr, July 17, 2007 at 10:32 AM EDT
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Getting asked “what’s a company worth on a takeout?,” especially in the consolidating mining sector, has prompted analysts at Desjardins Securities to apply the valuation metrics of the Rio Tinto PLC bid for Alcan Inc. as an exercise to other target prices in the sector.To recap, Rio’s bid of $101 (U.S.) a share values Alcan at 16.4 times and 16.7 times estimated per-share profits in 2007 and 2008, and at 10.5 times and 10.3 times estimated per-share cash flow in 2007 and 2008. In addition, the bid represents 3.2 times Alcan’s existing book value.Desjardins works out Teck Cominco Ltd.’s ultimate takeout value to be in the range of $60-to-$70 (Canadian) a share, versus a recent TSX price of $52. And even though it has voting and non-voting stock, the brokerage doubts the capital structure “will be an effective long-term deterrent,” if an international giant decides to take a run at Teck.HudBay Minerals Inc., trading around $28, gets a potential takeout range of $45-to-$50 a share that Desjardins calls “quite exciting.”Cameco Corp. delivers a wide takeout range of $30-to-$60 a share, compared with its current TSX price of around $50.Thompson Creek Metals Co., a pure molybdenum play, has a takeout value of $25-to-$30 a share, Desjardins figures, compared with its nearly $22 TSX price.Sherritt International Corp. warrants a takeout in the mid-$20 a share range, notwithstanding its flagship assets are in Cuba, compared with a nearly $17 TSX price.Lundin Mining Corp., which prides itself as an acquirer, would be worth in the $25 a share range, if things turned around, up from its nearly $15 TSX price.Quadra Mining Ltd., also on the acquisition trail, gets a range of $25-to-$30 a share from Desjardins, well above its nearly $17 TSX price.And running against the trend is FNX Mining Co. It warrants a takeout range of $25-to-$30 a share, which is below its $34 price on the TSX.

Google GOOG earnings: growth rate is likely to slow further

Daily Reach traffic is in clear downtrend from late 2006. YouTube is still in early days of monetising game, valuations will be very hard to justify with slowing growth rate, increasing CAPEX and premium paid for acquisitions.

Previous Q1 2007 analyses is here.

Ernst & Young Finds Private Equity Houses May Be Targeting Mining

One more bullish development: we just need a fraction of liquidity chasing all assets classes in order to ignite PGM sector.

From TheGoldReport: "In a recently released report, Ernst & Young Global Mining and Metals Center declared that the mining sector, which used to be of little interest to private equity houses, may now be under reconsideration as a private equity target.Ernst & Young asserted in their report, "Mining Is Now the Time for Private Equity," that mining management is "behaving more astutely in limiting capacity expansion and future overproduction. As a result, normal supply/demand economics are being established.""

Subprime formula: Subprime currency will boost all metals prices

Subprime formula: downgrade in mortgage back securities means more selling, more selling means more USD selling, yield going up means more selling USD nominated paper assets, gold, silver and other commodities are going up on strong population growth fundamentals and infrastructure developments.

For your home work:

http://sufiy.blogspot.com/2007/07/gold-and-metals-credit-suisse-issued.html

Japan Should Diversify Reserves, Abe Adviser Ito Says

USD is TOASTED from here, China has set up Investment Agency, now Japan will follow with Reserves diversification out of US Dollar(these two countries are holding key from the Pandora box):

http://www.bloomberg.com/apps/news?pid=20601080&sid=aoJJUD7FH_7Q&refer=asia

Lead Rises to Record $3,000 a Ton on China Demand

Who will benefit from record Lead prices: Lunding Mining can have a nice upside surprise this year on Lead production:

http://www.bloomberg.com/apps/news?pid=20601012&sid=agyXNcnh5U_M&refer=commodities

P.S. UBS in its research Note also bullish on metals.

Silver Wheaton SLW rocket is ready to go

Lundin Mining LUN.to now Takeover target

Gold Silver miners HUI Buy Before Next Leg Up

Gold and Metals Credit Suisse issued Bullish forecast for prices

Last week CS issued very Bullish forecast for metals prices: Copper, Lead, Zinc and for Gold. They have increased price targets for 2007 and what is more important for long term. Who will benefit: look no further for your homework then LUNDIN MINING Lun.to (take over target IMHO), SILVER WHEATON SLW break out, SILVERSTONE RESOURCES SST.v new SLW tightly held, COPPER FOX METALS CUU.v miscommunication cost them dearly, MANTLE RESOURCES MTS.v LUN involved, ALMADEN MINERALS AMM.to LUN optioned property for CGH.to, SUNRIDGE GOLD SCG.v Eretrea LUN play, CONTINIUM RESOURCES CNU.v looks like bottomed out, RAINRIVER RESOURCES RR.v discovery in the making, BAJA MINING BAJ.v huge upside in case for Copper over 3.0 USD, STERLING MINING SRLM.ob production this year, AVINO GOLD AND SILVER MINES ASM.v beatten to the dust assets value without mineral credit is bigger then MC, ROXMARK MINES RMK.v moly play, MINES MANAGEMENT MGN Montana Silver Copper play below latest PP huge risk/upside reward in Call on Common Sense in Montane permitting Game. Time to accumulate Uranium plays in exploration MAX RESOURCES MXR.v, JNR RESOURCES JNN.v, URANIUM SA USA.ax, NUPOWER NUP.ax. Two so different companies with something in Common: SURAMINA RESOURCES SAX.to and TNR GOLD TNR.v.

Increase your power: study and think reward is coming.