Alphabet Ord Shs Class C GOOG

Analyst Report - Concorde

[investorbling]

Google

GOOG : NASDAQ : US$490.59

BUY Target: US$650.00

GOOGLE KEEPS INNOVATING –

HIGHLIGHTS & TAKEAWAYS FROM

SEARCH ENGINE STRATEGIES (SES)

Event

We attended the Search Engine Strategies (SES) conference in San Jose

last week and spent the majority of our time with major search

marketers. We also had several meetings with Google product leaders at

their Mountain View campus and came away with these takeaways:

Positives:

• Google continues to drive innovation in areas that include: facial

imaging search, a new version of iGoogle that levers side-tabs, its

OpenSocial platform that allows gadgets to communicate with one

another, and virtual product Lively.

• Google gained market share in July (up 40bps vs. June to 61.9%).

• Coverage of ads may increase in certain transactional searches.

Negatives:

• Concern from SEMs that August is tracking mildly weaker than July.

Historically, August is flat to modestly above the trends seen in the

month of July.

• Headcount added in the quarter is likely to spike versus the JuneQ,

as college graduates join the team over the summer.

• Anecdotal evidence from conversations with developers that the

company struggles to retain the feel of a startup.

Impact

Shares of Google are trading at 21x times our 2009 EPS estimate of

$25.76. We maintain our BUY rating; our $650 price target implies a

25x multiple to our 2009 EPS estimate, in line with projected growth.