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GOOG Up With The Market
Stocks are rebounding after a few positive earning announcements and some signs of life from Europe. While investors fear rising costs with no real second growth engine for the company, catalysts for GOOG include continued Android and mobile traction; the release of Chrome operating system this fall; regained momentum in China; as well as progress in other newer initiatives (social networking, gaming, etc.). The stock trades at approximately 18x 2010 EPS and 13x Enterprise Value / EBIT, inexpensive relative to historical trading levels and the broader Internet group.
Margin Decline Only Temporary, No Change To Price-Target (Forbes)
Google’s EBITDA margin shrank sequentially from 54.3% to 51.7% in the most recent quarter due to higher operating costs as well as to revenue losses related to the European debt crisis. Trefis research firm believes that Google’s margin decline will be temporary based on the long-term thesis that search margins will stabilise around 59%, the company will gain search share, and the European market will recover. The margin decline does not impact the $683 price-target.
Value Google On The Future, Not On The Past (Seeking Alpha)
Google missed the mid-point of the analysts’ earnings expectation by pennies and the stock tanked. What investors should be focused on is the actual rate of change of earnings the company succeeds in generating. It’s the growth rate of earnings that will generate the size of the future income stream. Discount that back to get the present value, and one will find that Google is an undervalued growth stock.
Investor Worry That Google Will Lose Search Stranglehold (SmartMoney)
Wall Street’s ambivalence has made shares of Google a relative bargain. Despite new rivals, the company remains a dynamic online-search business that will thrive as more advertising dollars leave traditional media for the Internet. And the company could easily extend its stranglehold from conventional search to mobile. Any risk of its monopoly slipping as the world goes mobile is amply factored into its stock price.
Google Is Beating Apple in Smartphone Sales (Searchblog)
According to John Battelle, Apple has moved about 130,000 iPhones a day since the debut of iPhone 4. If you back out the mad rush to get one on release day and the run rate drops to more like 65,000 a day. Google reports that 160,000 Android phones get activated every day, which crushes even the more generous iPhone statistic. Android-based phones will far outnumber any other smart phone by year’s end. But, will lower pricing hurt margins?
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