The Google Investor is a daily report from SAI. Sign up here to receive it by email
GOOG Wavering As Stocks Rise
Stocks are edging higher amidst moves to ease the euro crisis, despite Case-Shiller missing expectations as home prices fall and AMR filing for Chapter 11 protection. Shares of GOOG are zig-zagging around the flat-line. Catalysts include continued Android momentum in the smartphone and tablet markets worldwide; Motorola acquisition approval and integration; regaining ground in China; any signs of life for Google TV (including Motorola); the roll-out of Google Music, social network Google+ and Google Wallet (see below); and progress in other newer initiatives (location-based services, mapping, gaming, daily deals, etc.). The stock trades at approximately 11.8x Enterprise Value / EBIT.Analyst Raises Google To A Buy, Says Facebook Not So Big Of A Threat (MarketWatch)
Citigroup analyst Mark Mahaney raised his rating on Google to Buy from Neutral. Mahaney had downgraded Google in April based “increased regulatory risks, concerns over very aggressive op-ex spend, and the rising influence of Facebook.” However, Mahaney now notes that “Google has sustained 28% organic revenue growth” and “has begun to show signs of margin stabilisation.” He also argues that while Facebook will likely “continue to influence more traffic on the Internet,” it appears the company “has no intention of getting into the search business.”
YouTube Serves 10x The Videos As Last Year (comScore)
Google’s video sites, driven primarily by YouTube, served 20.9 billion videos in October 2011. That’s more than 10x the views a year ago, according to comScore. Google remained the number one online video content provider in October with 161 million unique viewers. The search giant is followed by Facebook with 59.8 million viewers, VEVO with 57 million and Microsoft sites with 49.1 million. YouTube captured the highest share of average viewing time with 7.1 hours per viewer for the month.
YouTube Gets Disney And Pixar Movies For Rent (The New York Times)
Another blow to Netflix. Disney and Pixar movies are now available for rent on YouTube. The deal only includes a few movies today, but Google promises that hundreds will be coming to the site shortly. YouTube will also feature “extras” from Disney, such as behind-the-scenes clips. The movies will be available for rent both on the web and through the YouTube app on Google TV.
Google’s Leader In Search Product Management Says Mobile Ads Key To Growth (Investor’s Business Daily)
Surojit Chatterjee, Google’s leader of product management for search and location-based mobile ads, believes that Google’s mobile ad figures “speak for themselves.” The company has “seen a fivefold increase worldwide [in mobile ad revenue], in just about two years.” He also says that “79% of Google’s largest U.S. advertisers have not converted their sites to mobile.” That’s a lot of pent up opportunity as advertisers shift money from offline to online and mobile.
Only 27% Of The Global Mobile Phone Market Is A Smartphone (TechCrunch)
With all the talk of iPhone versus Android these days, it’s easy to forget that the majority of the world’s mobile users are on still on feature phones. A report from VisionMobile shows that, despite the sharp rise in smartphone shipments over 2010 and 2011, global smartphone penetration is at just 27%. As expected, in markets dominated by pre-paid subscriptions, the real battle is price where Nokia’s mid-tier Symbian platforms and BlackBerry consumer-targeted models still hold onto significant market share. However, both platforms are now facing threats from low-cost Android phones.