THE GOOGLE INVESTOR: Google Still Struggling To Find New Growth Engine

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GOOG Rebounding Slightly After Sell-Off
Despite reporting a strong quarter last week, GOOG got clobbered (down nearly 7% or $38) as investors expected better and the overall market was bloodied by the Goldman Sachs SEC fraud investigation. The stock was up a bit this morning. Google’s search business continues to recover from the recession, and it will probably drive solid growth for the balance of the year.  However, that business is maturing, and the company has yet to develop a second major growth engine. 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 18x 2010 EPS and 16x Enterprise Value / EBIT.

Google Hits Growing Pains Like Rest Of Media (Seeking Alpha)
Like everyone else, Google is struggling to make up for lost ground, says one writer.  Ad spending is creeping back and paid clicks are growing after a year and a half of declines.  However, the bellwether still needs to add to its growth portfolio if it is going to continue to trade at a premium multiple. The growth is probably not going to come from China and the jury is still out on mobile. So where does that leave the company in the eyes of investors?  The company needs to demonstrate new growth engines, but Google is still a very healthy, profitable company.

GOOG To Trade Down To $490 In A “Corrective Phase” (Short-Term Trading)
After earnings last week, Google lost more than $12 billion in market cap. That loss will not be easily filled as the bears move in on the stock. Based on trading technicals, GOOG shares are entering “a corrective phase that could bring price down to about $490.” “

Google Earnings: Positive For Internet Group, Slight Negative For Yahoo! And AOL (Jefferies & Company)
Jefferies analyst Youssef H. Squali believes that Google’s solid first quarter indicates continued momentum in consumer spending and the return of large advertisers, which bodes well for the larger Internet group. Google, however, reported disappointing cost-per-click growth (decline of 4% sequentially) which is a negative for Yahoo! and AOL. While the issue is partially due to foreign exchange rates, it is also likely that advertisers are shifting more spend to search engine optimization and opting to buy more long-tail keywords, where Yahoo! and AOL monetise less optimally.

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