GOOG down again in a strong market.
Shares of GOOG are trading off marginally today against the favourable jobless claims report. Google’s search business will likely drive solid growth for the balance of the year, but investors are concerned with increasing costs and lack of a second growth engine. Potential catalysts include Android and mobile adoption as well as benchmarks surrounding newer initiatives (which up until now have mostly been disappointing). The stock trades at approximately 19x 2010 EPS and 16x Enterprise Value / EBIT.
The Android Market Is Fragmented And It Is Its Own Worst Enemy (Business Insider)
AdMob released its March mobile metrics report this week and it shows just how fragmented the Android market is. Jay Yarow at Business Insider points out that 11 devices made up 96% of the traffic and users are split across 3 different versions of Android OS. For the sake of developers and the community as a whole, Mike Schuster at Minyanville says that “Google needs to remedy this problem quickly.” Even with the fragmented ecosystem, Android is doing very well growing at a compounded monthly rate of 32%.
Microsoft To Receive Royalties From Mobile Arch-Rival Android (Fortune)
Microsoft announced a deal with HTC in which the mobile phone manufacturer will pay Microsoft royalties. Seth Weintraub asks, “does helping Google make sense here? Is the iPhone such a big threat that Microsoft feels comfortable helping the Android platform on one of its biggest hardware platforms?” Jim Goldman at CNBC points out that it “might be Microsoft’s attempt at a more aggressive position against Linux.” But, “that’s the basis for Android and if Microsoft starts to see some progress on that front, Android could face some very serious problems indeed.” Whatever is going on, Pascal-Emmanuel Gobry notes that this wave of lawsuits and potential lawsuits shows just how heated the war to control the mobile internet has become.
Google Needs To Figure Out What Its Mission Is Already (SearchBlog)
Google is search, sure. “But the brand also means far more” according to John Battelle. A CNet reporter approached Battelle and asked “why Google isn’t doing a major brand campaign?…Because Google doesn’t know what its brand means.” Regardless of the company itself, people certainly know Google’s brand. The company topped Millward Brown (WPP-owned research company) annual top 100 global brand power list for the fourth year in a row. Battelle predicts that the search giant will become a software brand, or effectively “a newer, more open version of Microsoft.”
Google On Its Way To Being A Value Stock (The Wall Street Journal)
Gene Munster at Piper Jaffray says that because of Google’s weakness versus the rest of the market (down 15% versus the S&P at up 7%), there is talk amongst the buy-side that the stock has become more of a value stock than a growth stock. Investors are demanding more revenue growth from the company. Revenue based on consensus estimates for the 2011 calendar year is 15%, putting “the company right on the fuzzy no man’s land between value and growth.” Well, if that’s the case, when is the dividend coming?
Baidu Had Strong Earnings But Don’t Forget Google Is Still Around (Morgan Stanley)
In a note on Baidu’s earnings, Richard Ji at Morgan Stanley says that at the current stock price, the market is implying that Baidu may capture 20-30% of Google’s market share. He reminds investors that; 1) Google’s search service is still accessible by Chinese Internet users; 2) Google still offers most of its key services; and 3) According to Analysys (research firm), Google’s paid search market share dipped ~4 percentage points sequentially implying less-than-expected initial impact. In other words, Google’s China business may not be dead yet.
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