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Stock Brawl: Google

Wednesday, 13 Oct 2010 | 2:59 PM ET

Google is the company up for debate in today’s Stock Brawl at 3:40pm ET on “Closing Bell.”

A sign is displayed outside of the Google headquarters in Mountain View, California.
Getty Images
A sign is displayed outside of the Google headquarters in Mountain View, California.

During this summer’s Google Brawl, shares were down 19% and, currently, it has a market cap of $173 billion. That’s gone up about $14 billion since August. Google is one of the largest and most well-known tech companies on earth. Google’s stock price is currently at about $545 a share, as investors anxiously await for its earnings report due tomorrow our tomorrow after the close of trading.

David Garrity, Principal at GVA Research LLC, says Google is a definite buy. However, why does Porter Bibb still remain on the bear side?

Making Their Case: The Bull
David Garrity, Principal, GVA Research LLC

Garrity rates Google a Buy with a 12-month price target of $700 a share. Garrity believes Google has “solid fundamental prospects whether ‘double dip’ recession materialized or not.” The company has seen growth in its internet-connected wireless devices with its smart phones, tablets, and PCs, the Android “outstripping other competitors.” Google’s acquisition of YouTube only further contributes to the company’s earnings.

Garrity “fully expects that Google will post "blow-away" third quarter results coming at or above the high end of Street expectations, which is $7.10 a share and revenue of $5.44 billion.

Making Their Case: The Bear
Porter Bibb, Managing Director, MediaTech Capital Partners

Back in August, Porter Bibb had stated his bearish stance on Google, saying that the company lacks diversification and is not making money. Even now, when the company’s stocks are doing well, Bibb still stands firm on selling Google.

Here’s why:

Google’s dependency on advertising is the company’s downfall, says Bibb, with revenues tracking the overall strength of advertising, and it has also failed to expand their ad auction model to TV, radio, or print.

He says that Google share prices mid-way between 52-week high and is likely to stay there as attention gathers around Facebook, Twitter, and other social network providers. Google also faces new threats from Yahoo/Microsoft combine in pure search/advertising.

Although Google is benefiting from advertising recovery, margins are lower despite the 20 acquisitions so far this year. Bibb predicts, “Google should beat slightly the Street's $6.65 share earning on increased revenue. But margins will be down.”

Crystal Lau contributed to this article.

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