Will Google, Inc. (NASDAQ: GOOG) be able to stay afloat with its track record of good earnings reports this Thursday when it reports Q2 numbers? The internet search and advertising giant is expected to have a 33% lift over the year-ago quarter. To me, that sounds like an unstoppable freight train like it has for a few years now.

Google's growth means that the addiction many of us have to finding information anywhere at any time is playing right into Google's mantra of having universally-accessible information at our fingertips anywhere, with any device. Think the U.S. economy is affecting ad spending on Google? If analyst predictions are right this Thursday after the bell, you may be proved wrong.

The 25-analyst estimate is for a $4/share profit for Google. Any tech company would love to have that figure. The company, which has partnered with competitor Yahoo, Inc. (NASDAQ: YHOO) and rules many of the markets it competes in (specifically, search and advertising), still has not found an anchor to keep it grounded in terms of making money. Although most still comes from search text advertising, will that growth slow down in the near future? The more that's been speculated in the recent past, the more it hasn't turned out that way.

Many Wall Street analysts thought that when Microsoft (NASDAQ: MSFT) lost its bid for Yahoo! (NASDAQ: YHOO) that it would take the $45 billion it was going to spend and buy other online companies.

Think again. Microsoft's management says it is not so. According to the FT, "Steve Ballmer, chief executive, scotched talk that Microsoft would turn to a `plan B' of other acquisitions to boost its online presence." Ballmer feels that buying more internet companies will not improve its share of the search market. He is not simply after more pageviews.

The news is probably disappointing to several large online companies. AOL, Facebook, Monster (NASDAQ: MNST), and Digg might all have been part of a Microsoft plan to improve the size of its presence on the web.

The Microsoft comments send another message. Search is important. Display advertising is not. Search is an efficient way to make money. Display advertising's best growth years are behind it.

If Ballmer is right, the online world is about to go through a major upheaval.

Douglas A. McIntyre is an editor at 247wallst.com.

I read an interesting article over at CNBC about News Corp.'s (NYSE: NWS) MySpace asset. It seems that the social-networking site wants to do something about the fact that it won't succeed in booking $1 billion in net sales before the conclusion of the conglomerate's fiscal year. MySpace will undergo an aesthetic overhaul to make the site more appealing. As it is now, many users might find the site too busy and not so friendly in terms of navigation. The changes will take place over time, beginning this week and concluding in the fall.

The question on my mind now is, did News Corp. really need MySpace? Sure, the site has a heck of a lot of registered users, well over 100 million worldwide, but now people are wondering how effectively these users can be exploited in terms of generating economic value. The article mentioned the disappointing results so far from an advertising deal made with Google (NASDAQ: GOOG) back in 2006, one which had a $900 million figure attached to it.

The problem here for News Corp. is that users are fickle and may eventually find another MySpace in the future (obviously, Facebook is an example of how social networking continues to evolve and how any big brand in this arena can be challenged at any time). That wouldn't be good for long-term growth. Another problem cited is the fact that active MySpace users just want to socialize with their friends and/or network; they don't care about the ads. There's a lot of truth to this claim, and it's a huge issue going forward.

It seems to me like the ultimate test of a tool lies not with its functionality, but with who uses it. This goes double for search tools, as their ability to access information vastly increases their popularity, and thus marketability. Personally, I firmly believe that most questions in the world can be answered by one of three sites. If it's a movie or TV question, I head to IMDB. If IMDB doesn't have the answer, I generally head over to Wikipedia. And if, for some reason, Wiki's answer doesn't suffice, I pull out the big guns and head over to Google (NASDAQ: GOOG). Of course, so does pretty much everyone else in the world.

This, of course, explains why the United States has begun investing heavily in Google Ads in foreign countries. While the government's online presence is pretty impressive, even the best website is only useful if it can generate hits; given the United States' overseas unpopularity right now, getting foreign nationals to visit its sites is an uphill battle. With this in mind, Google now displays ads for various United States government agencies when the user enters various key words and phrases. Currently, the terms that will generate an ad from the America.gov website include "terrorism," "Middle East peace," "human rights," "press freedom," and "U.S. elections."

The U.S. is paying Google based on the number of hits that its ads generate. Currently, that ranges from $25,000 to $30,000 per month for the America.gov website and a further $15,000 for other Middle-East oriented sites. Given that the $15,000 expenditure generates roughly 300,000 hits per month, it seems like a pretty good deal. For that matter, it's worth noting that an internet search platform has become the U.S. government's go-to guy for worldwide advertising. If Google can get people in Saudi Arabia to express an interest in the U.S.'s informational website, it seems like there's little that the company can't do!

One of the messages out of the Google (NASDAQ:GOOG) shareholder meeting was that management plans to make more money on huge video-sharing site YouTube. Without going into detail, the search company said it would bring out sets of software tools which would make it easier for marketers to use the site more effectively.

According to Reuters, Eric Schmidt, the company's CEO "said getting the video sharing site to make money is the Web search company's top priority for the year." It is a nice promise, but it is hard to see how it will work.

Unlike new video sites including Hulu, a premium content web destination used by the large media companies to showcase their video, most of the YouTube content is posted by the ordinary citizen. The clips are primarily short and of poor quality. For some time, one of the most popular videos on YouTube was "The Farting Preacher." That may not be the kind of content big marketers find appropriate to use to draw new customers.

YouTube's problem is not its size. It is the largest video site in the world, based on visitors. But, it is also a website based on a community of people who see its as a place to homestead with the own content. Advertisers may never be comfortable with that.

Douglas A. McIntyre is an editor at 247wallst.com and the author of the Ten Stocks Over $10 letter.

Once again investors get left holding the bag.

Microsoft (NASDAQ: MSFT) shareholders should breathe a sigh of relief for not overpaying for an internet search company, Yahoo (NASDAQ: YHOO) where CEO Jerry Yang let his ego get in the way of handsome profits. Yang rejected the $47.5 billion offer that Microsoft put on the table. Why? Because he thought the company is worth more than $50 billion. As reported by the AP: "Clearly there's frustration," said Darren Chervitz, co-manager of the Jacob Internet Fund, which owns Yahoo stock. "I am not even sure if Yahoo cares about its shareholders because they didn't show much regard for shareholders' best interests in this process."

Yang actually thinks that a more sophisticated advertising platform is the secret sauce needed to produce a spike in revenue growth. Keep in mind that revenue grew by only 12% last year, and there is no indication that that number is going to be much higher in '08. Yang thinks that he will be able to grow revenue's by 25 percent in 2009 and 2010. Uh Huh!

I think that today's selloff in Yahoo stock will be an indication of what the public thinks of Yang's plan.

Could it be that in the long run he will be proved correct? I doubt it but only time will tell.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 5/5/08.

Well that was fast -- in August 2004 Google Inc. (NASDAQ: GOOG) went public at $80 a share and the stock climbed as high as $742 in November 2007, an 828% rise. But since then it's lost 37% of its value and some executives have bailed. The New York Times reports that Google's VP of Engineering, Douglas Merrill, just bolted for a position as president digital at record company, EMI.

But this is not the first of its executive departures. Google has also lost the following:

• In March, Sheryl Sandberg, who was VP for global sales and operations, left to become chief operating officer at Facebook
• CFO George Reyes announced last August that he would retire. At the time, Google said it hoped to find a replacement for him by the end of the year but has yet to appoint a new CFO

Meanwhile, Sys-Con reports that Google's U.S. growth is slowing. In 2007 its click-through rate grew between 25% and 40% but in January 2008 click-through growth was flat and in February click-throughs grew a mere 3%. And it gets worse --plain old Google searches that have nothing to do with paid clicks are also down 5% or 6%. Google attributed the January slowdown to its attempts to improve the quality of clicks and tighten up on accidental clicks.

The collapse of Google's (NASDAQ:GOOG) stock is the talk of internet investors. Wall Street is concerned that the number of people clicking on the search engine's ads is falling, perhaps due to the tough economy.

Google now has clearance to buy DoubleClick, which will get it into the huge display advertising market, but that segment of internet market is not growing very fast.

Google has one more card up its sleeve. The new program, called Ad Manager, will allow Google publishing partners to get potential revenue for ad space they have not been able to sell themselves. According to The Wall Street Journal, "Google is hoping that Ad Manager users will agree to carry some ads Google sells in ad spots on their Web sites they haven't filled themselves."

The display ad program is unlikely to yield much revenue for publishers or Google. The unsold display inventory on most sites is sold at extremely low rates. Most publishers sell their best spots to marketers who will pay a premium. Less desirable ad positions normally have very little value to advertisers because they run in places where users often don't see them.

Otherwise, it's a great idea.

Douglas A. McIntyre is an editor at 247wallst.com.

The numbers are pretty impressive. In 2007, internet advertising grew 25% to $21 billion. But Microsoft (NASDAQ: MSFT) may want to have another look at what it is offering for Yahoo! (NASDAQ:YHOO).

According to The Wall Street Journal (subscription required), internet ad revenue grew 35% in 2006. Between a possible recession and the natural slowing of increases as the dollar base gets larger, overall dollars in this market may only grow 15% in 2008, especially if the recession is deep. That would devalue almost every media company that gets its revenue from internet ads.

Companies such as Google (NASDAQ: GOOG) have driven their stock prices by being able to deliver targeted ads, which are an efficient way to reach clients. Much of the buyout activity for ad-serving firms is to extend the scope of this business.

But, just as the M&A work is done, internet advertising may be hitting an awful headwind.

Douglas A. McIntyre is an editor at 247wallst.com.

News Corporation (NYSE: NWS) is in talks with Yahoo! Inc. (NASDAQ: YHOO) in a deal that would combine the company's MySpace site and other Internet sites with the pioneering Internet portal, according to The Wall Street Journal [subscription required].

Under the terms of the deal, News Corp. would get a more than 20% stake in Sunnyvale, Calif.-based company. No doubt that Rupert Murdoch, New Corp's CEO, would want to buy all of Yahoo at some point, probably after it's completed the integration of Dow Jones, publisher of the Journal.

For now, the ball is in the court of Microsoft Corporation (NASDAQ: MSFT), whose $44.6 billion unsolicited bid for Yahoo was rejected as being being too low. Unless News Corp is prepared to buy the whole thing, Yahoo will have little choice but to agree to Microsoft's buyout. Murdoch, though, may have a few tricks up his sleeve.

"News Corp. has been reaching out to private equity firms since the day Microsoft's bid was first announced, according to one person familiar with the matter," the paper said. "The company had been originally reluctant to press forward with a deal until waiting for a sign from the Yahoo board that they were interested, according to another person."

Though time is on Microsoft Corp. (NASDAQ: MSFT)'s side in its $44.6 billion unsolicited takeover battle for Yahoo! Inc., (NASDAQ: YHOO), that doesn't necessarily mean it will win the war.

The world's largest software company late Monday said -- predictably -- it was disappointed that Yahoo "has not embraced our full and fair proposal to combine our companies" and that it was "confident that moving forward promptly to consummate a transaction is in the best interests of all parties.''

You didn't have to be psychic to see that coming.

But Yahoo co-founder and chief executive Jerry Yang isn't stupid. Microsoft, like News Corp (NYSE: NWS) in its pursuit of Dow Jones & Co. is an uneconomic buyer of Yahoo. Steve Ballmer wants to make sure that Yahoo doesn't fall into the hands of the either Google Inc. (NASDAQ: GOOG) or a media conglomerate such as Time Warner Inc. (NYSE: TWX), parent company of AOL. He has already pledged to pay a 62% premium for a company that many on Wall Street believe has seen its best days.

After my post of last week lambasting NebuAd for using information obtained from internet service providers in order to serve ads to web browsers based on users' browsing behavior, I was contacted by the CEO of NebuAd, Robert Dykes. He agreed to talk with me about his company and the internet advertising world.

I started by asking Dykes what steps NebuAD has taken to maintain the privacy of the customers of the ISPs with which they work. Dykes told me his company realized early on the security implications of its processes.

"In formulating the structure of how our equipment would work, (at this time) the government was subpoenaing AT&T and Verizon for their data... (and) AOL's search data had become public. We realized that...we had to be extremely careful in the way we structured our equipment and what we did on the internet... so that we would never be the subject of a subpoena from the government. So our structure is such that we never have any information that would be of use to the government. (There) never would be any information there of a personal nature.

"(We) built our system such that, as we map a user over and over again... that mapping is reflected only as a hash number, not as any personally identifiable information, not even an IP address... All we track is that somebody qualified for certain interest categories...(we) don't keep the raw data about what searches they did."

11-18 note: see my later post for more and updated information on this story.

A new ad delivery system unveiled this week by NebuAd will provide advertisers unprecedented details about your web access activities, allowing them to place their advertising more effectively.

Unlike conventional ad delivery companies that track your choices when you log onto a site that is part of its network, NebuAd takes the concept one frightening step further, tracking your browsing via your internet service provider (ISP).

The difference? Think of the typical ad delivery system as a lookout that spots you when you pull into the parking lot of the mall, who then alerts all the merchants that you've arrived, so they can put up the appropriate displays for your tastes.

In this analogy, NebuAd would be a guy staking out your house, ready to tail you, or your children, wherever you go, reporting your comings and goings to anyone willing to pay for the information.

The company claims that it aggregates and anonymizes the information such that it can't be misused, a claim that I view with great skepticism. As the FTC probes privacy issues and internet advertising, this company will probably serve as the stalking horse. If it's allowed to thrive, there will be little left to defend.

OK, so is China really communist? Not from what I can see.

Just look at the IPO market. Yes, it's been sizzling.

And, of course, the latest mega deal is the public offering of Alibaba.com, which operates a sprawling group of fast-growing Internet properties.

According to a report from Bloomberg.com, the IPO surged from HK$13.50 to HK$39.50. In fact, Alibaba.com sports a market cap of a cool $25.7 billion. That is a thrill for Yahoo! (NASDAQ: YHOO), which has a 39% stake in the company.

Actually, Alibaba.com even has earnings. Although, at the current valuation, they are more than 150 times the market cap. That makes Google (NASDAQ: GOOG) look pretty cheap.

While China certainly has strong growth prospects, there are still risks. Can the country continue its torrid growth rate? What about political instability?

If you look at the history of US markets, strong IPO markets are usually a sign of excess and a top. So, investors should show caution.

And if you want to check out the IPO action here in the US -- which is not as frothy -- you can visit DealProfiles.com.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

The IPO of Alibaba, the large Chinese e-commerce site, may show that the China stock markets are topping. The company appears to have raised $1.5 billion for about 17% of the company. This is good news for Yahoo! Inc. (NASDAQ: YHOO), which invested a billion dollars in the site, but it could also make the US portal look bad. If the China market moves down before Yahoo! can off-load some of those shares, its initial investment in the company may not look like a coup.

The astonishing thing about the Alibaba IPO is that, according to The New York Times, "the I.P.O. price translates to a multiple of 55 times its forecast 2008 earnings." The number serves to point out the fact that, even with its economy growing at 10% a year, sustaining P/Es at this level will become impossible, as it did in the Japanese markets and US internet stocks in late 1990s. Both of those bubbles led to corrections of more than 50%.

The Shanghai Composite Index is now up well over 200% this year. The bull argument for an ongoing increase is that the emerging China middle class needs a place to invest its money and cannot move that capital into overseas equities. That makes the market overly dependent on one set of buyers.