The Google Investor is a daily report from SAI. Sign up here to receive it by email
GOOG Up Against The Broader Markets
The market was up in early trading and is now mixed as sales of previously owned homes fell, a sign that the housing market is struggling to recover from the recent financial crisis. Shares of GOOG are up strong against a red tech tape. Upcoming catalysts include continued Android momentum; regaining ground in China and pushing into other emerging markets; updated software, adoption and media partners for Google TV; the roll-out and label backing of Google Music; and progress in other newer initiatives (+1, location-based services, mapping, gaming, etc.). The stock trades at approximately 12x Enterprise Value / EBIT, inexpensive relative to peers and historical trading levels.City Of San Francisco Goes With Microsoft Over Google (Information Week)
Point for Microsoft in Google’s backyard. The city of San Francisco plans to consolidate seven separate email systems to Microsoft’s hosted cloud-based email service over the next year. The city is currently migrating 23,000 employees across 60 departments and agencies to Microsoft Exchange Online. Testing has already begun with 300 pilot employees. The initiative would cost $1.2 million per year, which breaks down to $6 per month per user. The contract is another win for Microsoft as it takes on Google Apps. Read more at Business Insider.
Google’s $3 Billion Mistake (The Motley Fool)
There are three stages of response to Google’s decision to raise nearly $3 billion in debt according to Rick Aristotle Munarriz at The Motley Fool:
- Denial: Why is Google panhandling with $37 billion in cash?
- Acceptance: A bond offering helps grease the palms of underwriters (I completely disagree. They don’t need to grease the bankers.)
- Denial (Again): It’s dumb. It was a dumb decision.
Take it easy. Like a homeowner, it was just time to refinance. That was the cheapest $3 billion anyone will ever borrow.
Playing The Smartphone Market: Buy Google And Apple, Sell RIM And Nokia (Seeking Alpha)
Nokia maintains the largest user base of mobile phones in the world, Research In Motion is (was) first choice among corporate users, and Apple and Google have the two hottest devices on the market. So how do you play those statistics? Go long on Google. Android arguably wields the greatest influence in the smart phone market today. Google has plenty of room to invest as well in YouTube, Chrome, etc. moving beyond the one trick pony stigma.
Top Technology Stocks For TIAA-CREF (Seeking Alpha)
TIAA-CREF’s equity fund has a diversified portfolio, 19.8% of which is invested in technology stocks. One of the top picks is Google with strong earnings growth of 39.28% during the last five years. The stock trades at a forward P/E ratio of 13.4x. Analysts have an average target price of $708, implying 40% upside potential in intermediate-term. Many don’t expect such a bold move from Google, but the stock is likely to beat the market.
Business Insider Emails & Alerts
Site highlights each day to your inbox.