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GOOG Continues To Push North
Stocks are off to a decent start on Tuesday after a strong quarterly report from IBM and a surge in housing starts, sparking investor optimism after yesterday’s sell off. Shares of GOOG continue to rise, in line with NASDAQ. Catalysts include continued Android momentum in the smartphone and tablet markets; regaining ground in China; updated software, adoption and media partners for Google TV; the roll-out of Google Music and social network Google+; and progress in other newer initiatives (location-based services, mapping, gaming, Chromebooks, etc.). The stock trades at approximately 12x Enterprise Value / EBIT, inexpensive relative to peers and historical trading levels. Check out our new updated Google model, complete with valuation and charts.
The View On Google+ From An Ex-Googler (Rethrick Construction)
There’s no shortage of punditry around the future and fate of Google+, the massive social networking effort from Google. Much of it centres around killing Facebook. This is a somewhat contrived and sensational narrative. Google+ isn’t all that innovative. It hits all the notes that a Facebook clone merits, and adds a few points of distinctiveness that are genuinely compelling. Twitter was a far greater innovation that continues unchallenged. That said, broad product innovation wasn’t exactly what they were going for.
Former MySpacer Cautions Google Against Filtering Google+ (TechCrunch)
MySpace founder and former president, Tom Anderson, is cautioning Google against relying too greatly on algorithmic filtering technologies in Google+. Over-reliance on such systems has left Facebook struggling to compete (are they struggling?). In attempting to manage the Google+ “signal to noise” ratio, Anderson believes the search giant could inadvertently kill off the copious interaction that has marked the initial days of the new social network.
Google Has Moved On From Being A One Trick Pony (The Register)
Google has a habit of cannibalising others’ businesses based on its own unassailable lead in search and online ads. The problem is that it involves giving away free software and services. Android is proof of that. But Google has been accused of being a one-trick pony. With Google+, Android and other initiatives, Google demonstrates that it can build new products, but perhaps not new businesses. This is a great strategy so long as none of Google’s competitors figures out a way to undermine those advertising dollars. So far, so good. But no monopoly lasts forever.
New Smartphone Buyers Prefer To Get An iPhone (ChangeWave Research)
ChangeWave Research released a study that shows that of North Americans (89% U.S., 11% Mexico or Canada) expecting to buy a smartphone in the next 90 days, 46% are planning to get an iPhone while only 32% are thinking about an Android phone. Just because Apple hasn’t released a new iPhone in more than a year doesn’t mean demand for the handset is waning (or that people, like myself, aren’t waiting with baited breath for the new one). Apple, as many a commenter to our blog has pointed out, isn’t interested in market share so much as profits.
Apple’s HTC Victory May Set High Royalty Precedent For Android Devices (AppleInsider)
Apple’s initial legal victory over rival HTC in a patent infringement suit could pave the way for Apple to collect high royalties from devices running Android. Mike Abramsky with RBC Capital Markets believes that Apple has the upper hand. It’s likely that the company will try to establish a high royalty precedent on Android devices. And HTC is one of the smaller handset makers with a limited portfolio of intellectual property. Apple is also going after Motorola and Samsung. HTC already pays Microsoft $5 per handset.
Daily Trader: Buy Google As The Social Media Play (Seeking Alpha)
If Facebook is worth $75-100 billion as a game aggregator and storage for photos, Google+ has the potential to considerably add to the market cap as the numerous areas of Google are combined into one easy to use social networking interface. Integration of Google’s products into an efficient and effective social platform will drive revenues and earnings as investors seek out a truly social experience. Investors would be well advised to take a closer look at Google as the strong quarter appears to be just the beginning.