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GOOG Off With Markets
Market gains are gone with Bernanke’s testimony and as CPI comes in at expectations. Shares of GOOG are off with tech. Google will announce earnings on Thursday, July 19. Investors continue look for Android momentum and monetization on smartphones and tablets; integration of Motorola; regaining ground in China; the resurgence of Google TV; continued growth of YouTube; expansion of social network Google +; and progress in other initiatives (location-based services, mapping, Google Wallet, Google Music, etc.). The stock trades at approximately 10.2x Enterprise Value / EBIT.Google Earnings Preview: What To Expect (Various)
Join us LIVE on Thursday for full coverage of the release and management conference call.
- Webush Morgan: James Dix recently initiated coverage with a Neutral rating. He sites three issues: 1) gross margin pressures (estimates are below Street consensus); 2) risk of higher opex growth; and 3) the economics of paid search advertising could suffer from the encroachment of paid-attention marketing. Rating: Neutral. Price-Target: $640.
- Susquehanna: Analyst Herman Leung expects Google’s results to come in-line with Street expectations. Concerns around two core areas have resulted in a lot of investors on the sidelines: Motorola’s ability to compete and future plans and the health of the ad business. Investors are concerned how Google can be an operator of hardware and if ad pricing can remain stable and continue to drive solid growth and earnings over the next few years. Rating: Positive. Price-Target: $725.
- Bank of America Merrill Lynch: Justin Post believes there is increasing complexity with Motorola. Based on advertiser checks, he expects more of the same this quarter driven by paid click growth strength, offset by ongoing CPC pressure. He thinks the stock could work in the second half if Nexus 7 and other Android tablets sell well and Google product search monetization can drive a sequential lift in the holiday quarter. Rating: Buy. Price-Target: $730.
- Morgan Stanley: Scott Devitt discusses the overall ad world. His conversations with digital ad agencies offered a wide range of year-over-year search growth rates for the industry overall and Google in particular, including the U.S. in the mid-teens to 30% range (he models Google U.S. at +18%), and single-digit growth in Europe. With market deceleration, potential margin compression, FX headwinds, competition may temper Google’s share price appreciation in 2012.
- Stifel Nicolaus: Jordan Rohan says core desktop search business may show material deceleration this quarter, presenting a bit of a challenge to investors hoping Google will show upside to the consensus expectations. There are three wild cards: 1) Google has has told advertisers to expect to pay for Product Listing Ads later this year; 2) costs are harder to forecast; and 3) the outlook for Motorola Mobility is murky at best.
- Piper Jaffray: Gene Munster believes Google could post core revenue and EPS slightly below the Street at $8.45 billion in revenue and $10.12 in EPS given difficulties in Europe and the currency headwind. He is adjusting his numbers by 2%, but leaving forward estimates intact. Munster says there may be slight downside to shares as a result, but likely limited as shares appear to reflect some of these uncertainties. Going forward, Motorola’s results will be consolidated into Google’s report and will not likely have any meaningful impact on second quarter earnings. Rating: Overweight.
There you have it.
Google Loses One Of Its Best (Business Insider)
Marissa Mayer is the new CEO of Yahoo. She was Google’s first woman engineer. Mayer managed its search product for years. She also led development of iGoogle, Google News, and Gmail. In 2010, she switched to Google Maps and other local products. This is a big loss for Google, and an upset Ross Levinsohn, Yahoo’s interim CEO. Read all about Marissa’s departure here.
Questions Of The Day (Scoople)
Let us know what you think:
- Do you ever use a different search engine than Google?
- Do you think Marissa Mayer will be successful in turning around Yahoo?
For me personally, no and yes. In that order.
What Google Is (TechCrunch)
No, really, what is Google? Google has its fingers in so many pies that there are quite a few angles. For consumers, Google is, or at least used to be, a search company. On the other hand, for investors, and cynics, Google is an ad network. One former Googler says, Google is, and always has been, a systems company. What binds all the different Google efforts together then, is not an overarching plan, but an underlying technology platform. This may not form a coherent vision, but great things will continue to come from it. As well as no small number of duds.
Google Next In Line To Snap Up A Social Media Marketing Company (Business Insider)
Consolidation continues apace in the social media campaign management sector, with Salesforce.com’s acquisition of Buddy Media, Oracle’s of Vitrue, and Syncapse’s of Clickable, and the deals will likely keep coming. There are several obvious, gigantic acquirers sitting on the sidelines who’d very much like to get a piece of the action: Google, IBM and SAP have all pursued and / or rejected potential deals in the sector. If Google were to buy one of these companies, the business would give it insight into how Facebook works.
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