Perkins’ Picks

So a friend of mine continues to ask me to recommend Google’s stock as he is extremely excited about his new Google phone. Google has said that they believe in the future mobile will be increasingly important as we observed our lives migrate on to PCs and now that shift continues to mobile phones.

Google management even went as far as to say that they believe the majority of their revenues in the future will originate from mobile. This may be very true, but if your analysis is as a result of the Google phone, let me say it so nobody else has to:The Google G1 phone sucks.

And they should give the Sidekick their patent back, too.

Most of us have moved on to sleek iPhones and Blackberries. Ok, I get that they are not attempting to make their money via hardware appeal but here’s as one of my old employers use to say some VAR (value added research).

Cell phones are also fashion statements.

The consumer has been educated on high-end design with Apple and RIM’s products. If you are over the age of 15, you’re not even allowed to buy a sidekick anymore. They can’t sell the use of the internet on phones as they do in their ads as some proprietary edge for the phone. My friends and I go to google.com on iPhones and Blackberries over drinks all evening long and I’ve never heard anyone complain.

• Listen, Google is the world’s largest provider of online search, with strong brand recognition, relationships with more than 1 million advertisers, and global market share approaching 70%, they will definitely make their money.
  
• In fact, Google thought that a bad economic environment would help their business as advertisers switch to more cost effective on-line ads, but Barclays (was Lehman) recently reduced their estimates “on further macro weakness as recent industry checks and data points suggest the search environment has deteriorated.”
  

GOOG is trading below $300 today, Barclays has a price target of $490, and the average price target is $513. I agree, there is plenty of upside.


• The company continues to have 0 debt and approximately $14 billion in cash. In addition, advertising may slow, but it won’t disappear. Under $300 with a forward PE of about 13, Google makes the grade.