Google Shows Off Chrome OS in Technical Preview

Google's (GOOG) entry into the Operating System space is at least a year away, but the Internet and Search behemoth showed off a technical preview of what they've been tinkering with to an audience of journalists and "techies".

Expanding on the browser that Google released called Chrome, and its currently advertised 40Million user install base, the operating system advanced by Google is a means to the future of cloud computing. All applications on Chrome OS will be web apps and all data is in sync with the cloud at all times. Basically a user would be able to log into any Chrome OS computer and treat it like your own. The Browser is the key.

Major targets for Google with this system are speed and security. With all major components of the OS, either incredibly lightweight or in the cloud, the time to get a computer up and running will be drastically reduced. The demo netbook that Google showed off was ready to go in 7 seconds. The security model Google is working on with Chrome OS is also designed for the Internet age. Building specific locks to the core of the system from applications will allow Chrome to remain unharmed by viral and malicious programs. The Internet connected self-update and synchronization system will essentially allow Chrome users to always have the most current and safest version of the operation system. If something does go wrong, Chrome can re-install a clean version right on the spot and re-sync all the user's data, almost transparently. Some advanced thinking from a company with a lot of advanced thinkers.

But, how will it all work, what about the powerful desktop applications the computing public has grown accustomed to? Well, initially Chrome is situated for a secondary computer, Internet connected for on the go work, like the netbooks and smart-phones of today. As users get more accustomed to living in the "cloud", it is Google's hope that Chrome can grow into larger and more advanced hardware. Internet technologies have also come a long way in the last couple of years, allowing for far richer web applications than in years past. That alone makes the web app only Chrome a solution to think about, as increasingly more work, social and play is done online.

So, what's in it for Google, and more specifically Google's investors? Well, the long-term battle on several fronts between Google and Microsoft (MSFT) just got a lot more interesting with today's demonstration. Netbooks are the fastest growing computer segment, according to several analyst and consumer measurement reports, and it is a field now dominated by Microsoft, first with Windows XP, and now, or so the hope is, Windows 7. Since Chrome OS is open-source and will be free to manufactures, the Zero price point will put a lot of pressure on the folks from Seattle. But to Google, this is the start of a next generation of cloud-only computing users, a part of the business, where from an infrastructure stand-point Google is dominant. The company can afford to guide development here making nothing from it, but enabling a generation of faster, and more secure web surfers, who'll in turn be more trusting of the cloud, and in turn more receptive to tailored Google advertisements .

There's that buzzword again, the cloud. Google, like other giants in the tech space, want to be the big fish in the cloud business. There are other companies that would focus on the corporate market first and get tangible business that way. A lucrative business that will be as well, but Amazon (AMZN), IBM (IBM), Microsoft and HP (HPQ) are all in competition to provide the infrastructure and cloud services for business. Google's reach has always been about advertising to the consumer, and by providing products and services for free, it's building a trust with the consumer that companies rarely have an opportunity to experience. Granted, user data in the cloud brings up many privacy concerns, but Google seems to be able to side-step its way around most issues in that realm, all the while gathering more tailored information about the surfing and shopping habits of its users.

Google's mantra is clearly changing, of course they are still behind the well publicized "Don't Be Evil" but in the new age of computing and business, Google's really striving to serve up "The Perfect Ad". Because the most lucrative ad, is the one that's as tailored as it can possibly be, because it gives the highest potential of a sale, and after all its the sale that drives business. Chrome OS is the next step towards that potential sale.

Disclosure: Author owns GOOG

Job Market healing, albeit very slowly

Employment in this economic environment has been a very sensitive subject for both politicians, investors and most importantly job-seekers. The economic issue is first and foremost on the mind on many Americans, but it is also causing political upheaval in Washington as the slowing of job losses can be used as an argument only so many times before political capital and goodwill is eroded completely.

Jobless claims data out today showcased that first-time claims came in at just over 500,000, which is the fewest since January of this year. The four-week average for first time claims, about 520,000, is off 20% from peak claims levels. For October, job losses numbered in the 190,000 range, well off peaks of 700,000 during this recession. Accumulation is a big issue, as jobs lost since the recession began number more than 7.3Million, and despite government figures that point to job creation/savings of about 600,000 from the stimulus package it still is a difficult data point to swallow, for those trapped without employment, making the march for continuing jobless benefits.

The market's have reacted bearishly to the jobless claims, but overall losses today have been muted, with the major market trackers off about half a percentage point. Materials and Energy sectors are leading the decline today, with Financials barely trailing for the prize of day's worst performers. With the S&P holding levels around 1100 points, the market has been pricing in recovery during its recently extended rally. Investors, to keep this rally going, are going to need to see tangible upticks in demand and that means some tried and true job growth going into 2010. If anyone is to keep this market going next year the need will be to have jobs creation to build on the economic recovery GDP figures have already suggested is here.

Warren Buffet Completely Bets on Rail, and America

If not so much on rail, than on the American economy, the bet by Berkshire Hathaway (BRK.A) and Warren Buffet on Burlington Northern (BNI) buying the remaining 77% stake to take complete control over the railway company is a stern statement about the direction and prosperity of America. The $44Billion value of the deal including debt and previous investments makes it, for Berkshire, the biggest investment in the history of their business.

An efficient rail system, especially one built on high-speed rail transit, has been one focus of the current US Administration with plans calling for an $8Billion investment in rail as part of the Stimulus Package, with another $5Billion rail investment set aside in the budget for 2010. While President Barack Obama's plans call for efficiencies and high speed in the passenger rail business, the infrastructure work is sure to bode well for the transports and delivery businesses as well.

It is in this business that Mr. Buffet plans to play the recovery of American economics. Eventually as demand for good picks up with improving unemployment, the demand for transport of those various goods for manufacturing and sale will boost the prospects of companies like Burlington Northern.

Investors over the years have learned to trust the calculated wisdom of Mr. Buffet, and it generally isn't a good idea to bet against the man that's built one of the biggest fortunes of our time. As he's shown as recently as the financial crises (with an investment near the bottom in Goldman Sachs that's bore much applauded profits), the Oracle of Omaha isn't sitting on any of his laurel's. This investment is as much a bet on an American recovery in jobs and economic growth as it is about the prospects of the two hundred year old rail business.

Even if investor's aren't convinced rail is the future, the actions of one of America's wisest and most patient investing minds have to taken seriously.

Disclosure: Author holds no position in BRK.A nor BNI

GPS Investors flee from Google's Shadow

Google Navigator, a seemingly natural extension of existing Google Maps technology that's found on smart-phone platforms like the iPhone and Android, has GPS company investors running from the hills.

The issue isn't that the technology from Google (GOOG) is significantly better, it does look very good and would be a formidable competitor, the issue is Google's affinity to price all-things-Internet at $0. Considering Navigation subscriptions run in the $100s of dollars/year, not to mention the cost of the units themselves, how many GPS users would turn to something else from, for now, trusted Google at zero cost that works on their existing cellular phone? I'd bet many, and the market is betting that way too. Gizmodo (Link), the technology blog, has an informed quick review of Google's entry into the Navigation business.

The sell-off in the market has certainly contributed to some of the downfall in GPS stocks, however major players Garmin (GRMN) and TomTom (TOM2) are down 16% and 20%, respectively.

The age of convergence in technology is certainly upon us, better cameras are coming to cellular phones, better media players are already there, and now GPS navigation capabilities are becoming mainstream. The stand-alone technology gadget/device is becoming a niche rather quickly.

Android, the free open-source cellular operating system developed by Google, is taking off by leaps and bounds this year, with several high profile phones on tap on high profile networks, such as Verizon (VZ), AT&T (T) and T-Mobile in the US. The platform, which recent research has predicted, could overtake the popular Apple (AAPL) iPhone in market-share over the next few years, needs applications like Google Navigator to be exclusive on enticing handsets in the months to come. The Momentum is building for Android and Google is keeping the fire lit with its Navigation application.

The only problem for investors, Google doesn't want to charge for anything but advertising! In all likelihood however, this is the next step in Navigator's life cycle, and Google can continue its march into dominance of the mobile ad industry, just as it has trounced the competition in search.

Disclosure: Author owns GOOG

Apple's Earnings Aftermath

By now the news media has digested the rock-solid quarter from the Steve Jobs-led-innovative bunch in Cupertino, so now its time for the experts to weigh in. First, here's a simple recap of Apple's (AAPL) quarter.

$1.67Billion in profits ($1.82/share) on $9.87Billion in revenue, which compares to $7.9Billion in revenue and $1.14Billion in profits ($1.26/share) a year ago. Considering the street was anticipating $1.42/share, with a whisper number in the $1.60s/share, this is quite the professional thrashing. Even the highest estimate on the street was left in the cold in the $1.70s.

The real kicker here however is when Apple accounts for iPhone sales right away and not under the subscription method. In that instance the company earned $2.85Billion on sales of $12.25Billion. Clearly this company can not be priced based on P/E valuations.

Now for the sales figures.
3.05Million Macs (A new quarterly record)
10.2Million iPods
7.4Million iPhones

All impressive in their own right, considering iPods are by all accounts supposed to be dying off, and iPhone 3GS supply was limited most of the quarter. I'd speculate Apple wants to stock up for the Christmas season now as it steps into its newest market, China. The 3Million Mac number is most impressive, as the company beat its previous quarterly record by 400,000 units, and its not even the Christmas season yet.

Apple has just also announced 2 new iMac desktops, starting at $1200 a newly redesigned entry-level MacBook at $1000, and 3 models of the Mac Mini, setting one of the up to be a home media server type device. This refresh of the desktop line is sure to spur holiday sales into a segment that has been stagnant for sometime as laptops dominate computer sales. In what's still considered a recessionary environment, Apple stands out as a testament to quality, design, innovation and marketing power. The quarterly performance definitely can't be argued with.

The pros had their say before the quarter and the market had its say boosting shares to all time highs over the $202 mark. What do the pros say now? Higher price targets and upgrades galore!

A who's who list of tech analysts that includes firms such as Piper Jaffray, Oppenheimer, RBC, Carris & Co., UBS, Needham & Co. have reiterated, upgraded or raised targets on Apple with UBS being the highest at $280. The love-fest with the electronics maker didn't stop there as targets came in at $277, $275, $260, $235 and so on. Although the numbers the pros give vary, one thing was common-place. Apple is a must-own tech bell-weather.

Just think when they change their accounting! Over the last 4 quarters, non-adjusted profits total $9.77/share vs $6.11/share under GAAP. Roughly a P/E of 20 (now that this calculation makes sense)!

Oh, and the company now keeps 19% of its market cap, about $34Billion in cash in its bank vaults.

Disclosure: Author owns AAPL