THE GOOGLE INVESTOR: Fidelity Dumps 2M Shares Of GOOG, Investor Confidence In The Toilet

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GOOG Flat This Morning
Shares of GOOG are essentially flat this morning, while the market is up some on stronger than anticipated new housing construction numbers for April. Weighing on the stock are investor concerns with increasing costs, lack of focus (wind farms) as well as lack of secondary growth engines. Catalysts include potential news flow from Google I/O starting May 19, resolution of the AdMob acquisition investigation, Android and mobile adoption as well as traction of newer initiatives. The stock trades at approximately 19x 2010 EPS and 15x Enterprise Value / EBIT.

Fidelity Dumped 2 Million Shares Of GOOG During The First Quarter (Reuters)
In the first quarter, Fidelity Investments pared back stakes in some of its largest holdings, one of which was GOOG. Fidelity is still the largest shareholder of GOOG, holding approximately 6.4% of total shares outstanding at the end of March, but that stake is down from 7.2% at the end of 2009. It is estimated that the company sold close to 2 million shares, or 11.25% of its total stake. Fidelity’s largest holding continues to be Google competitor Apple at 5% of total shares or $11.5 billion. While diversification is typical for mutual fund giants, it doesn’t bode well for investor confidence or conviction in the stock.

Munster Bullish on YouTube Advertising Potential But Still A Small Part Of Overall Revenue (Piper Jaffray)
Piper Jaffray analyst Gene Munster believes that YouTube will continue to grow rapidly (100% increase in videos viewed over the last 7 months). Munster believes that demand for inventory remains high, as 83% of ads on YouTube’s homepage in April were tier 1 advertisers, up from 80% in March. He views YouTube as an exciting part of Google’s growing display advertising offering and anticipates that the video site will make up 3-4% of net revenue in 2010. He reiterates his Overweight rating on GOOG and $700 price-target.

YouTube Turns Five Years Old And Shows Potential; For What Is To Be Determined (Business Insider)
YouTube officially launched beta in May 2005, five years ago. Today, the video site has 24 hours of video uploaded every minute with an average of 2 billion daily views. With that much content and advertising real estate, Eric Schmidt “assumes” YouTube is already profitable due in part to Ben Ling, the YouTube monetization and partners guy. The nonchalance hasn’t won over investors, however, who are concerned with associated expenses and the economic impact on ad revenue. So what does YouTube really mean to Google? If the property can become the go-to source for live video across all (or even some) mediums, it will be a disruptor on a whole other level. We’re waiting.

Google Agreed To Idiotic AdMob Kill Fee; Investors Should Be Pissed (Business Insider)
In late April, Bloomberg noted that Google CEO Eric Schmidt had been so desperate to win the AdMob bidding war over Apple that he agreed to an astounding and unheard of $700 million kill fee if the deal failed to go through. This came up at the shareholder meeting, when Schmidt was asked whether Google had actually agreed to this. He didn’t answer the question but stated he was confident the deal would be approved. Henry Blodget at Business Insider points out that while the deal should be approved, the way the FTC is acting, it may not. Google could therefore be out $700 million for nothing, something that should have been flagged for shareholders the moment the deal was announced. AdMob should be praying for the FTC to put the kibosh on the deal so they walk away with $700 million as well as the company.

Google Still Looking To Extend Into TV; This Time With Sony And Intel (Financial Times)
Google, Intel and Sony will reportedly announce a consumer electronics and broadcasting industry “breakthrough” at the Google developer conference (Google I/O) this week called the “Smart TV” platform. Google is expected to enable and call upon its Android developer community to create custom, web-enabled applications for Sony’s TVs and Blu-ray DVD players. Google has been looking to extend into TV since 2007. Proof will be in the pudding.

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