Finance Blog

Let’s look at the broad S&P 500 Index over the past 5 years…

Since the 2002 bear market, it’s had a decent run, jumping 26% in 2003, and slowing down to a respectable 2-3% per year after.

A look at the blue chip Dow Jones industrial average…
Similar story, a bit more volatile, but still doing well at 4-5% for the last two years.

Finally, let’s look at the tech-studded NASDAQ composite index.
The most volatile out of the three broad indices, it had an amazing run in 2003, but the last year it’s tanked, has the tech sector run out of steam?

Bill Gates says he wished he were not the world’s richest man.

“I wish I wasn’t. There is nothing good that comes out of that,” said Gates, whose personal fortune sank by billions since last week when the software giant disappointed investors by saying new investments would crimp earnings.

That’s a quick fix, he could simply donate all his money to charity, and live like a normal person.

Microsoft is launching its own online ad brokering service called adCenter.

Microsoft makes bid to take a bigger piece of a U.S. online advertising market estimated to be worth around $15 billion. AdCenter will be initially limited to paid search, but Microsoft envisions the service being a one-stop shop for online advertising across many of the company’s software platforms including Xbox games and mobile phones.

Microsoft’s stepping right into Google terriority of advertising (where pratically all their revenue comes from). However, Microsoft still has a long way to go as it only has about 11% of searches, compared to Google’s 49% and Yahoo’s 22%.

Yesterday, Electronic Arts Posted 4Q Loss of $16M. Shares tumbled 10.92% today, closing at $48.55.

Revenue actually climbed 16%, but the loss was attributed to one-time charge for taxes and acquistion costs. So this price drop comes a bit unwarranted.

Taking a look at the games industry; sales of video games industrywide have slowed as customers have been withholding purchases and waiting to switch to next-generation models of game consoles.

Specifically, customers are holding out for Sony Corp.’s PlayStation 3 and Nintendo Co.’s Revolution consoles, both due later this fall.

The outlook for Electronic Arts still looks good to me, with no debt and strong game titles, they should do well once again with the transition of new consoles.

Microsoft has held discussions to buy a stake in Internet media company Yahoo to compete against Google, the Wall Street Journal reported on Wed.

The Microsoft vs Google battle is heating up, just recently Google complained about Microsoft browser and how IE7 will be integrating MSN search in their app.

Microsoft Reveals New Technologies, Including Internet Classified Service, Local Street Function

Microsoft launched their Live Expo service yesterday, it’s a new classifieds listings service where you can buy, sell or trade stuff, post jobs, services or announcements. Their hope is to compete against free classified service like Craiglist. They also hope to provide more personalized service, for example, narrowing down their search based on people from their work, a buddy list, and geographical location.

Another service they launched was the Local Street Feature for the Virtual Earth service. The new search function, dubbed “street view,” aims to give people a driver’s view of downtown Seattle and San Francisco, using pictures detailed enough to make out cars and people. Available in test form, it’s similar to Amazon.com Inc.’s A9 search engine, which provides detailed street-level views of certain cities.

Big news yesterday was when Google’s CFO, George Reyes, told investors that growth at the online search leader was slowing. Reyes predicted it will become increasingly difficult for Google to maintain its rapid growth pace. In his own words…

“Most of what’s left is just organic growth, which means you have to find ways to grow your traffic,” Reyes said. “Clearly, our growth rates are slowing, and you see that each and every quarter.”

His comments spooked Wall Street, as Google’s shares plunged by as much as $51.87, or 13%, on the Nasdaq immediately after his comments. The shares wound up shedding $27.76, or 7.1 percent, to close at $362.62

The downturn prompted Google to release a statement assuring investors the company still sees “significant opportunities” for revenue growth.

Tuesday’s harsh backlash reminded investors of the extreme volatility of Google’s stock — an offshoot of the company’s steadfast refusal to make financial projections or share many details about its strategy.

Just to recap: Back in Jan. 31, Google missed earnings estimates for the first time since the company’s IPO. The stock price plunged by as much as 10% before rebounding slightly to close at $401.78, a decline of $30.88, or 7.1%. That was the likely the clear signal that GOOG was now on its way to decline.

Google co-founders Larry Page and Sergey Brin have vowed not to forecast the company’s earnings because they worry about becoming caught in a trap that will require them to focus on short-term profits at the expense of what’s best for the long haul.

Personally, I think will likely change their policy seeing as their tightlipped approach tends to provoke dramatic reactions to both good news and bad news.

The Big Picture: The stock price is now 15 percent below its record high of $475.11 reached just three weeks ago but the shares remain a golden investment for those who bought at $85 in an August 2004 initial public offering.