The Google Investor is a daily report from SAI. Sign up here to receive it by email.
GOOG Up With Market
As the market is applauding lower jobless claims and mortgage rates, shares of GOOG are up accordingly. While investors fear rising costs, catalysts for GOOG include continued Android and mobile traction; the release of Chrome operating system this fall; regained momentum in China; as well as progress in other newer initiatives (social networking, gaming, etc.). The stock trades at approximately 13x Enterprise Value / EBIT, inexpensive relative to historical trading levels and the broader Internet group.Is Google Still A Growth Company? (Fortune)
Google is being compared to Microsoft, defending the monopoly, but investors need to realise that what’s going on today isn’t the way it’s always going to be. Easier said than done, but there are a host of businesses that Google is starting to see traction in; Android, Google Apps, etc. Granted, now those businesses don’t make money but if Android were a stand alone company today, people would be going crazy over it saying that’s a growth business they want in.
Google Gets Its Game On; As Does Everyone Else (Seeking Alpha)
Google is reportedly talking to leading developers of social games, as part of its plan to create a social game service dubbed “Google Me.” The U.S. social games market is expected to triple to $2 billion by 2012, so everyone wants in on the action: Electronics Arts bought Playfish, Disney snatched up Playdom, and Gamestop bought Kongregate. It’s not just advertising dollars at stake, social gamers pay for virtual items that help them win games. Google could use some of that growth.
Google Shouldn’t Give Up On Social (CNBC)
Facebook could represent the biggest threat to Google’s model. Google makes money when the public Internet grows, and Facebook is largely private and unindexable. So any additional minute spent on Facebook is a minute Google captures less information about the users’ search traffic and browsing patterns that results in less potential to make money. So Google needs to keep making social bets, but it will have to do a lot more than build its own version.
Android Tablet Coming To Kmart For $150 (Engadget)
Reports are surfacing that Augen, a hardware company, is bringing a $149.99 7-inch Android tablet to Kmart shoppers complete with access to the Android Market. Inventory should be hitting shelves later this week. Perhaps this is the tablet answer to Acer‘s notebook, servicing the low end of the market which proved to be quite successful.
$10 Billion In Annual Revenues Expected From Android, Says CEO (The Wall Street Journal)
Eric Schmidt did a little napkin maths to explain how Google plans to earn $10 billion in annual revenues in mobile. The goal is to get as many Android users as possible so that a large audience is using its ad-supported mobile products, like search and maps. At one billion users, Schmidt’s goal, it would take $10 per user per year to make $10 billion. Seems reasonable. However, at the current growth rate of 160,000 new handset activations per day, it would take 17 years to hit that user base.
Pressure Is On To Give Back To Investors With A Buyback Or Dividend (Business Week)
With $30 billion in cash, the pressure is on from investors wondering when Google’s buyback or dividend is coming. The company was supposed to start buying back shares in the open market when the AdMob deal closed. That’s not happening. A dividend doesn’t look like it’s coming anytime soon either.