Tech Check

Google's Back! (Did It Ever Leave?)

How Google Got its Groove Back

A funny thing has been happening to Google lately. Have you noticed? It's going up!

And I'm not talking about the one-day pop it got from those surprisingly good earnings, which shocked just about everyone on Wall Street and sent Google shares soaring.

I'm talking about the day to day creep-up, the steady momentum, the renewed interest in a company that never deserved to be on the outs to begin with.

The parallels to Apple are pretty striking.

Yes, the two are in decidedly different industries, but the status they enjoy in their respective industries is pretty striking. They are each the single, exciting brand, doing innovative things, controlling their markets, owning the buzz.

I know, Apple only has a paltry 7 percent of the PC market; but remember, it controls something like 80 percent of the digital music world. And that 7 percent was only 3 percent a couple of years ago, so while competitors like Dell and HP try to hold on to their market share, Apple continues to gobble up new market share every day. So regardless of those PC industry numbers, never lose sight of the momentum.

Likewise for Google.

If you look at Google's stock price, it would seem momentum has been ebbing and flowing since those November highs. If you look at Google's momentum in the markets it operates in, it's all about flowing. Fact is, Google continues to own Internet advertising. And with Doubleclick coming on line, it will likely own display advertising as well, stealing more share away from Yahoo.

Yes, its net advertising may be slowing, but listen to Google's CEO Eric Schmidt, who says the slowdown isn't happening nearly as fast as predicted. More than that, he says the company remains unaffected by any macro-economic slowdown worries.

And even more than that, for the first time last quarter, Google saw better than half its revenue come from customers overseas. It's another way Google can insulate itself from any domestic economic concerns.

That's the obvious. In the pipeline, Google has its Android mobile software initiative as the company pushes more strongly into the wireless world. We've seen huge sales numbers from the likes of Research in Motion and Apple for high-end smart phones. Android will help handset makers bring the high-end to the low-end, and help Google solidify its grip on mobile net access and advertising. Maybe not today, or next quarter, but soon.

But as the Ginsu Knife announcer said, "Wait -- that's not all!" Don't underestimate Google's investment in Sprint-Nextel and Clearwire and the WiMax initiative.

It's another way Google can go mobile, and not necessarily just on handsets; but on new laptops and in new cars that will take advantage of what some say will be the Wi-Fi killer. Google is placing bets with Intel, Comcast and Time Warner on this distribution method that could touch 140 million Americans by 2010. Seems like a good bet.

All of this has helped UBS raise its target this week dramatically on Google shares, from $570 a share to $750. Bullish? Yes. Absolutely.

But as I've said repeatedly about Apple, and now about Google: these are tough times for traders so focused on the day-to-day. Park some money in Google with a longer-term time horizon and you run the risk of handsome returns. It takes discipline.

Take a page from Eric Schmidt's own playbook, as he shared with our own Maria Bartiromo last week: "We don't really focus on short-term movement of the stock price. We said, since the company went public, that we're in this for the long term, and we want shareholders to be with us. These short-term fluctuations in outlook and so forth are not something that we focus on. We don't talk about it. We're really focused on this huge opportunity before us, which is automating the trillion-dollar industry that is advertising."

Trillion dollar industry. And while Microsoft and Yahoo fumble about, slowdown or not, Google is becoming the only material game in town.

Questions?  Comments?