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Google Starts to Bleed—In a Good Way

Google Headquarters
AP
Google Headquarters

Grab a hanky! Google's officially in nosebleed territory thanks to a Wall Street upgrade parade post earnings

The company's third quarter report Thursdaywas a blockbuster, and its guidance — yes, I know there wasn't any, but if you listen to CEO Eric Schmidt's comments, it certainly seems like he's talking about the future — was pretty stellar.

This is a company that blew past earnings expectations, leaving Wall Street in the dust, and careening its way back to its historic highs.

Still doubt it? Yes shares today are only - only? - up about 3 percent, but that takes the company to another new 52-week high, just shy of $550. And last night's report, along with its share reaction, is good enough for Google to command a slew of new targets.

Canaccord Adams is making the biggest splash with the firm slapping a Street-high, $700 target on Google, up from its $560. The firm rates shares a "buy," citing a reacceleration of growth. UBS raised to $635 from $580; Goldman Sachs also raises to $635; and FBR raises target to $680 after going to $660 just two days earlier.

The fact is, all this time Google has been a one-trick-pony, but it's been a helluva pony!

The slowdown in ad spending spurred Google to focus on software, like Android and Chrome, and Android appears poised to start paying some significant dividends. It still has a long way to go to catch the Nokia, Research in Motion, Microsoft and Apple numbers, but it's winning contracts, attracting developers and it can found on all the major carriers, including Verizon, AT&T (soon), Sprint and T-Mobile. Will Android supplant online advertising as Google's main revenue driver? No. Ever? No. But it doesn't need to. It'll drive more advertising and eyeballs, and that's what Google is after.

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This is a very young company, with bright minds and lots of money. It can afford to be patient, and think long term, and it can certainly afford to weather the vagaries on Wall Street. It can afford hubris and it can afford to eschew humility. None of this might sound good to investors focused on day-to-day or even quarter-to-quarter.

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But with a report like last night's, in an economy like this one, investors simply can't argue the success and effectiveness of this management team. Long term, and even short term, Google is a force, and it seems not even Microsoft or Yahoo can reckon with it.

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