Google’s profitable streams come in great part from its search engine marketing business – They are a public company so checking their 10-Q filing is a no-brainer – it has all you need to know about their revenue streams. MS has multiple very profitable lines of business. Eroding Google’s revenue stream has the usual cascade effect of making it less able to make money due to poorer funding. MS can use the revenue from multiple streams to erode Google’s marketshare. Google does not have robust revenue streams in critical areas MS has, like back-office, and has sucky new offerings and dismal marketing. Google has been trying to diversify – I haven’t seen any fireworks of real success yet. Disclaimer: I have not analyzed their 10-Qs in depth – only superficially – the last time I really analyzed Microsoft’s filings was in 2007.

Then there’s the second Horseman of Apocalypse: Apple. The deals MS and Apple are inking, and likely to pen down in the future, are bound to put a hole in the Googly mothership. Does this mean Google is going away? Not anytime soon. Google is freaking huge.

One thing to understand about public company financing is that the amount of money you have to fund your business has a lot to do with your stock price, and your stock price is tied to what the market believes your stock will be worth in the future – not now. The companies that are better managed from a financial standpoint – maximizing what they do with the money they have available – are the ones that succeed. When the market believes you won’t deliver on the earnings goals of the future, it means the returns on the stock won’t be there and thus your stock is not worth as much as the investor thought when they bought it, so they may sell it before other folks find out you’re not going to make your numbers, which cascades in share sales at ever-lower prices down to the point where the market expects you will be. In a sense, the market corrects itself for its over-valuation of the company. The problem for a publicly-traded company is that a drop in stock price is like someone going into their bank account and literally taking money out and throwing it away; it causes the company to have less funds to fund its operations, which in turn causes it to miss its targets. Its not a death spiral, but you get the picture of how companies can crash to the ground.

The tech industry is a place where disruptive models and tech cause things to literally vanish overnight. Anyone remember when Altavista was hot shit?

What goes around… Comes around…

I wonder who will be the Third Horseman of Apocalypse in this story.

Post Sparked by Shoemoney’s post titled: “Is Google’s One Trick Pony About To Be Euthanized by Microsoft“