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China or No China, Is Google Still a Buy?

As Google prepares to close and exit its China search engine operation, how should investors be playing the company’s stock? Clayton Moran, senior vice president and Internet analyst at The Benchmark Company, shared his insights.

Moran said he maintains a “buy” rating on Google as the news doesn’t change the near-term outlook and there are plenty of prospects around the world for the search engine giant.

“Today, it doesn’t mean particularly a lot to Google’s financials,” Moran told CNBC.

“China’s about 1 percent of their total revenue, so it’s not a meaningful contributor.”

But the longer-term model is different, he notes.

"Five years from now, it’s about growth and the potential for growth and China’s obviously the largest Internet market by users," he warned. "So therefore it was a big opportunity for Google and they’ll miss out on that.”

Meanwhile, Moran said Baidu ,the Chinese-language Internet search engine, is the winner if Google exits the Chinese market.

“Baidu has two-thirds of the search market share today and that’s the natural place for users to go as a substitute to Google, so Baidu stock is up nicely as a result of this news and that makes sense to me,” he said.

  • Watch Moran's Previous Appearance on CNBC (July 17, 2009)

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Disclosures:

Moran does not own shares of GOOG, YHOO, BIDU or MSFT.

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