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GOOG Flat/Down As Market Bounces
Stocks are currently down slightly after trading higher after the bell on a better than anticipated drop in unemployment claims. Upcoming catalysts include third quarter earnings announcement (Thursday, October 14, 2010 at 4:30pm ET), continued Android growth; the release of Chrome operating system this fall; regaining momentum in China; as well as progress in other newer initiatives (Google Me, gaming, social, etc.) The stock trades at approximately 14x Enterprise Value / EBIT, inexpensive relative to historical trading levels and the broader Internet group.
Analyst Raises Estimates And Price Target On GOOG On MySpace Savings (All Things Digital)
J.P. Morgan analyst Imran Khan raised his price target on Google to $569 from $558 (this after his $73 reduction in his price target and estimate cut back in July). He also increased estimates noting that upside is due to the renegotiation of the MySpace deal which he believes will save ~$200 million in traffic acquisition costs (TAC) annually and could show up as soon as this past quarter (third quarter). He maintains his Overweight rating on shares.
Google Checkout Haters Rejoice! Moving to PayPal (The Street)
Google has finally enlisted eBay’s PayPal service and is preparing to launch the payment system on its Android Market later this month, according to sources. The move would not only help smooth a bumpy checkout system on Android Market, it would also bring Google closer to the type of seamless payment process that Apple manages at its iTunes and App Store. Google has been trying to make Google Checkout into something big for years, with some success. But Android was the platform for Google’s payment plans to become huge. So much for that.
Android Most Popular Mobile Operating System The Last Six Months (Nielsen)
According to Nielsen’s August report, Android is now the most popular operating system among people who bought a smartphone in the past six months with 32% share, while Blackberry RIM and Apple iOS are in a statistical dead heat for second place among recent acquirers at ~25% (this includes a full-month of iPhone 4). Among all smartphone owners, Blackberry still holds the dominant share with 31% of the market, though its lead over Apple is declining. Android is on its way to being Google’s next big money maker.
Google Will Provide Its Serendipity Engine Through Acquisitions (eWeek)
How will Google compete against Facebook‘s “Like” feature and deliver its serendipity engine? Google’s plan to display search content onto users’ mobile phones without having users do anything but walk down the street will come through an acquisition. Most likely by purchasing one of the following companies: GetGlue, Hunch and My6sense. These are all socially leveraged applications and each company has a unique handle on how to serve users.
Google Is A Buy Based On Free Cash Flow (Seeking Alpha)
Business School 101: If a company is growing free cash flow while at the same time reducing capital expenditures, it is basically reducing the cost to produce and thus you have economies of scale. Enter Google. The company has had a tough go of it since it hit its all time high of $747 in 2007 and has since been on quite a roller coaster ride. Investors who picked the stock up for around 17x 2010 estimated free cash flow, should thank the Chinese (and thus downfall of the stock this year) for the opportunity to do so.
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