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Internet Information Providers Industry Essay

1040 words - 5 pages

Name & Fund Name: Junxi Nie ---- Market Mafia
Date of Analysis: Jan. 12. 2014
This analysis led to the following trade(s) executed on (date):
Trade Date Price Quantity
1.
Industry Description
Firms in Internet Information Provider industry generate their sales primarily through families of their sites. This industry excludes e-commerce companies (such as eBay, Amazon) as well as Internet software firms (like Oracle and Microsoft) or firms that otherwise are generally firm rather than consumer facing. Companies that are part of this industry specialize in creating or aggregating interesting and useful contents that attracting eye-balls to their site. And most of ...view middle of the document...

Therefore, the total number of internet users can give us a roughly estimate growth of those companies.

The number of internet user [2] is keeping increase and 81% of people is using internet in US, however only 42.3% of people in China is using internet. This could mean that even though the US has entered into a mature status, China is still in growth status. And the growth rate can be extremely large because base number of china in very large.
As people spend more time online, so advertisers have become more interested in reaching them online. I believe that advertisers will migrate from offline media to Internet at a higher rate than we used to think. Increasing number of users, continuing innovation and increasing mainstream adoption will compel companies to flesh out the Internet component of their advertising budgets.
And advertises may not be the only source of income for internet information providers companies. However, the Internet information industry is being valued almost exclusively on the growth of its current advertiser related cash flows. We have seen significant additional profit upside from initiatives and development efforts in the pipeline, like customize, content on-demand, and various subscriptions. New innovation may prolong or even accelerate the rapid growth phase currently enjoyed by the industry.
Compare IIP Industry Performance with Technology Sector: [3]
From the data above, we can know that the internet information providers industry only account for 0.28% of technology sector’s market capitalization. This very low given that there are 32 industries in this sector, so the average should be around 3%. This may suggests that internet information providers industry is new players in the market. This idea can be strengthened by comparing the dividend yield percentage. Internet information providers industry has very low dividend yield, one reason can be the high price growth and another reason maybe that the companies reinvest their earnings. The growth opportunity for internet information providers industry is very huge.
When compare the profitability ratio, the return on equity, net profit margin is higher for internet information providers. Therefore, the...

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