THE GOOGLE INVESTOR: Sounds Like Google Tablet Is On The Way

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Google Tablet

GOOG Recovering Slightly
The stock is up about $4 to $514 today, recovering some of the loses from earlier in the week. Investors are concerned with increasing costs, lack of focus (wind farms) as well as lack of secondary growth engines. Catalysts include resolution of the AdMob acquisition investigation, Android and mobile adoption as well as traction of newer initiatives (which up until now has been disappointing). The stock trades at approximately 19x 2010 EPS and 15x Enterprise Value / EBIT.

Google Not Creating E-Commerce Market Place (Bank of America / Merrill Lynch)
Bank of America Merrill Lynch analyst Justin Post attended a conference by leading e-commerce management firm ChannelAdvisor, which lead him to believe that Google is not building an e-commerce marketplace. The company is running a pilot program with several retailers to display real time store inventory in search results. While Google will have more of a store-like feel, it will not be converting sales.  We don’t think Google needs to convert sales to be a player in the e-commerce space.  CPA Product Ads and an increasing number of improvements to all of its product offerings has been increasing retailer ad spend and has enabled Google to take a cut of sales from participating retailers.

In a separate note, Post analysed comScore results for April.  Total Google users were up 13% year-over-year with total page views slowing to 25% increases year-over-year (still way ahead of the competition). Google’s search user growth was up 13% versus Yahoo’s 2% growth. Google’s search page views were up 29% versus 12% decreases for Yahoo (ouch). YouTube users were up 18% to 106 million monthly uniques.

Google Teaming Up With Adobe To Bring An Android / Flash Tablet; Now We’re Talking! (All Things D)
Google hasn’t publicly acknowledged that it is working on a tablet computer that runs Android, but the company has been supportive of Flash in its battle with Apple. Therefore, a Google tablet would intuitively use Flash standards. At the Web 2.0 Expo Tuesday, video surfaced of a prototype Android tablet running Adobe Flash and AIR. As long as this gadget isn’t like the Nexus One answer to the iPhone (which is not performing as well as the company had hoped), it could make the new tablet market very interesting.

Google Entering The eBook Market To Take On Amazon And Apple (The Wall Street Journal)
This Summer Google will make its entry into the digital book market, putting the company squarely in competition with Amazon and Apple in the eBook business. It also foreshadows a possible e-reader (or tablet computer) release from the company. In February, The New York Times reported Google’s plans to enter the digital book business through a program called Google Editions. Reaction on Tuesday wasn’t positive, with the stock off 5% as investors are weary over lack of focus and playing the catch-up game rather than focusing on innovation.

Google Blew $145 Million In The First Quarter To Find The Next Google (paidContent)
In a 10-Q filed earlier this week, Google spent $145 million in cash to purchase 9 companies during the first quarter. This figure has grown in the last month given the recent investments in Invidi, BumpTop, and two wind farms in North Dakota. Jay Yarow and Nick Saint at Business Insider consider wind farms to be an outrageous and undisciplined use of cash and shareholders should be pissed (they were). Some better uses of cash include the purchase of Twilio, TV advertising, and offering shareholders a dividend.

Google Gains Search Share In April (MarketWatch)
According to search data from Experian Hitwise, Google’s search market share rose to 71.4% in April from 70% in the prior month. Yahoo’s share remained relatively flat at 15% while Microsoft’s Bing slipped to 9.4% from 9.6%.

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