Google shut its mainland Chinese-language portal on Monday and began rerouting searches to a Hong Kong site, over two months after it said it would not accept the self-censorship demanded by China's government. Mark Mahaney, Internet research director at Citigroup Investment Research, shared his insights on the search engine giant.
“For shareholders, this was a negative decision—they just took out 5 percent of their long-term value,” Mahaney told CNBC.
“This was a principle decision on their part so I respect that, but this hurts shareholders.”
Although investors are worried about Google cutting itself off China’s massive Internet population, Mahaney said there is a chance that the firm will return to the market over the next 5 to 10 years.
“It’s going to be very hard for anyone else to step in—it’s hard for Yahoo to step in,” he said.
“Microsoft’s Bing will have a chance to get in there, but they will face the same regulatory government pressures, and you have a very well-executing competitor: Baidu.”
Mahaney added that Google is still the leading Internet company in every other market around the world.
“Putting it in context, the other 95 percent of Google’s business is another reason why we like this stock—they’ve got mobile coming, video on display advertising coming—that’s plenty of reason to buy the stock, especially when you get it at a discount to its growth rate…We think you can still buy Google here at 20 times earnings.”
- Watch Mahaney's Previous Appearance on CNBC (Feb. 19, 2010)
More Market Intelligence:
- China or No China, Is Google Still a Buy?
- Maria Bartiromo: Google's Responsible Leadership in Action
- Cramer: What Is Google Without China?
CNBC Data Pages:
Mahaney does not own shares of GOOG, AMZN or EBAY.
Mahaney’s firm has received compensation for non-investment banking services from GOOG, AMZN, EBAY and YHOO. The firm also owns shares of YHOO.