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GOOG Up With The Broader Markets
The market is up despite an increase in unemployment benefits last week as trends in layoffs point to a slowly healing job market. Shares of GOOG are up $2 in early trading. Upcoming catalysts include continued Android growth; the release of Chrome operating system; regaining momentum in China; adoption of and media partnerships for Google TV; and progress in other newer initiatives (location-based services and mapping, gaming, social, etc.). The stock trades at approximately 14x Enterprise Value / EBIT, inexpensive relative to historical trading levels and the broader Internet group.Five Analysts Chime In On Google’s Potential Acquisition Of Groupon (The Wall Street Journal)
A few quick analyst takeaways on Google’s rumoured acquisition of Groupon:
- Youssef H. Squali at Jefferies believes a significant part of the social media draw of Groupon comes from using Facebook Connect which may end up becoming a contentious issue for Google.
- Jason Helfstein at Oppenheimer thinks that while the implied valuation is high he believes Google is uniquely positioned to leverage the 3,000-person local sales force to up-sell Google ad products.
- Jason Maynard at Wells Fargo says that Groupon’s revenue trajectory and the potential combination with Google’s location based assets like Maps and Places would be very powerful in unlocking strategic value and enhancing Google’s mobile ecosystem.
- Douglas Anmuth at Barclays Capital has concerns regarding 1) whether Groupon is a technology-centric company; 2) whether Groupon has sustainable long-term competitive barriers; and 3) whether Groupon’s large global employee base fit with Google’s algorithmic and self-serve approach. But views the potential deal can be complementary for Google and be a key factor in its mobile, local, and social ambitions.
- Ben Schachter at Macquarie knows that Google is getting little, if any, credit for its $33 billion in cash / equivalents (~$104 per share), so he sees little near-term downside as a result of the deal.
Microsoft Behind EU Antitrust Investigation Of Google (eWeek)
Search engine experts are exasperated by the European Commission’s pending witch hunt of Google for alleged anti-competitive behaviour over shopping sites such as Foundem, Ciao and eJustice. And Microsoft might be behind the investigation. Foundem is a member of an organisation called ICOMP funded partly by Microsoft to lobby against Google in Europe and Microsoft acquired Ciao in 2008. Microsoft may not be able to compete with 70% search market share, but it can certainly engage in legal subterfuge, backing smaller companies to aid its cause.
Google / Yahoo Japan Alliance Approved Despite Microsoft’s Antitrust Cries (The Wall Street Journal)
While Google might be having trouble in Europe and despite Microsoft’s best efforts, Japan’s antitrust regulators approved the search alliance between Google and Yahoo Japan. Although Yahoo and Microsoft agreed on a search and online advertising partnership last year, Yahoo Japan was free to choose any search service and not obligated to use Bing. Yahoo Japan’s homepage is the site for more than 50% of searches in Japan, a country that ranks third in Internet users behind China and the U.S., accounting for about 5% of global Web traffic.
Google To Launch eBook Service Later This Month To Compete With Amazon And Apple (The Wall Street Journal)
Google is rumoured to be finalising and releasing its eBook service later this month in the U.S., with an international release in the first quarter next year. The service ties user’s book purchases to their personal Google account. The search giant is expected to offer hundreds of thousands of titles for purchase, and millions more for free. This is a natural extension of the Android Market for tablets a la Apple and Amazon’s Kindle.
Google Beats Out Microsoft For The GSA (Google)
The General Services Administration is moving 17,000 of its employees to Gmail and Google Apps, making it the first federal agency to move all its employees to e-mail in the cloud system. As the battle for the cloud gets uglier between Microsoft and Google, Google is the winner this time. Although, according to Matt Rosoff at Business Insider, it’s going to take a while for Google to make Apps into its next big business. At the standard government price of $50/user annually, the deal will amount to less than $1 million a year in revenue for Google.
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