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GOOG Soars In Up Market
After another report indicating modest improvements in employment, the market is up with shares of GOOG soaring nearly 2%. Stock specific catalysts for GOOG include continued Android and mobile traction; the release of Chrome operating system this fall; regained momentum in China (if that’s possible); as well as progress in other newer initiatives (Google Me, gaming, social, etc.) The stock trades at approximately 13x Enterprise Value / EBIT, inexpensive relative to historical trading levels and the broader Internet group.
Mobile Search Queries Have Increased 4x In A Single Year (All Things Digital)
Mobile search is coming into its own. Nick Fox, Google’s director of product management, spoke at the 2010 Citi Technology Conference Wednesday and told the investor audience that mobile queries have increased by a factor of four in the past year. Citi analyst Mark Mahaney estimates that Google’s mobile revenue will end the year at a $500 million net revenue run rate.
Google’s New Search Won’t Instantly Increase Revenues (All Things Digital)
Google’s new instant search is cool, however it won’t make any significant impact on Google’s income statement in the near-term according to JP Morgan analyst Imran Khan. He believes the new product will have little to no impact on monetization rates and is purely an improvement to user functionality. That said, Google expects the impact on costs to be in line with existing search cost growth curve, which should ease investor fears of increasing costs.
The Smartphone Race Has Only Begun (Market Watch)
Google and Apple both stand to win the smartphone race according to Cody Willard at Market Watch. As of now, only 25% of the total mobile phone business is smartphone enabled; that’s a lot of upside in an expanding market. There’s no reason to think that there can’t be several winners. Even Nokia and Research In Motion can survive. ‘Survive’ being the operative word.
Google And Apple Trading At A Discount To S&P (Market Watch)
The two companies who stand to profit the most of the burgeoning applications market are trading at cheaper valuations than the S&P 500. Google trades at 12x enterprise value to earnings while Apple trades at 10x enterprise value to earnings. That compares to Exxon at 12x and Caterpillar at 15x. Time to back up the truck.
Google Needs To Start Monetizing Apps To Move The Needle On The Stock (Seeking Alpha)
Developers have been skittish about Android because of the ability to have users pay for applications. Various studies show users of the iPhone OS pony up while Android users like the freebies. So how will increasing Android users and applications affect Google’s stock price? Play around with the inputs you are comfortable with and see where it shakes out.