google

Analyst: Victor Sula, Ph.D. Initial Report July 9th, 2009

GOOG daily

7/09/09

450 440 430 420 410 400 390 380 370 360 Š BigCharts.com

15 10 5

Millions

volume

0 May

Jun

Jul

MARKET DATA

Share Statistics (01-Jul-09) Symbol Current price Low/ High 52 weeks Average Volume Market Cap Dil. Shares Outstanding

2007

2008

% Chg

Q1 2008

Q1 2009

% Chg 6.2%

GOOG

Revenues, $ Mn.

16,594 21,796 31.3% 5,186

5,509

$402.49

Gross margin

59.9%

60.4%

0.5% 59.3%

61.9% 2.5%

30.6%

25.4% -5.2% 29.8%

34.2% 4.4%

Net margin

25.3%

19.4% -5.9% 25.2%

25.8% 0.6%

EPS, $

13.29

13.31

247.30 - 555.68 Operating margin 3,342,560 127.16B 315.9M

0.1%

4.12

4.49

8.9%

Google Inc. Google Inc., a technology company, maintains index of Web sites and other online content for users, advertisers, Google network members, and other content providers. Its automated search technology helps users to obtain instant access to relevant information from its online index.

The Company provides targeted advertising and Internet search solutions, as well as intranet solutions via an enterprise search appliance. Its products and services for users include Google.com for search and personalization, which provides Google Web Search, Google Image Search, Google Book Search, Google Scholar, Google Finance, Google News, Google Video, Google Blog Search, iGoogle and Personalized Search, Google Product Search, Google Custom Search, Google Base and Google Webmaster Tools.

The Company’s products for users also comprise Google Docs, Google Calendar, Gmail, Google Groups, Google Reader, orkut, Blogger, Google Sites, and YouTube. In addition, it offers Google Toolbar, Google Chrome, Google Pack, Picasa, and Google Desktop for users; and Google GEO product Google Inc. (Nasdaq: GOOG)

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Analyst: Victor Sula, Ph.D. Initial Report July 9th, 2009

line comprising Google Earth, Google Maps, and Google Sketchup and Sketchup Pro, as well as provides Google Checkout, an online shopping service.

Analyst Consensus According to Jefferies & Co., despite tough times Google gains share in global paid search advertising. Based on comScore raw data Jefferies & Co. estimated that Google maintained its U.S. paid-clicks growth at 20%-25% year over year.

Additional data also bode well for Google: a) U.S. Search activity in aggregate was up 32.9% year over year in May 2009; b) Google search volume grew faster than the market at 39.7%, with Yahoo up 29.5% and Microsoft (MSFT) up 24.9% year over year; and c) Google’s search-market share in May increased month over month to 65% versus 64.2% in April, seemingly from share gains at the expense of Yahoo (down about 30 basis points month over month), Microsoft (down about 20 basis points month over month) and AOL (down about 30 basis points month over month). The ad coverage (percent of searches with paid ads) remained within the 40%-45% range, suggesting a relatively stable level of monetization.

The leading position within the industry and superior profitability and growth rates compared to industry and S&P500 allows Google to trade with premiums to its peers.

Highlights Google reported revenues of $5.5 billion for the quarter ended March 31, 2009, an increase of 6% compared to the first quarter of 2008 and a decrease of 3% compared to the fourth quarter of 2008.

The net income for the first quarter of 2009 was $1.42 billion as compared to $1.31 billion in the fourth quarter of 2008. EPS for the first quarter of 2009 was $4.49 on 317 million diluted shares outstanding, compared to $4.12 for the first quarter of 2008 on 317 million diluted shares outstanding.

The Company said net revenue for the period ended in March came in at $4.07 billion. Excluding special items, Google said earnings for the quarter were $5.16 a share. Analysts on average had expected Google to post earnings excluding special items of $4.93 a share and $4.08 billion in net revenue, according to data from Thomson Reuters.

Thomson Reuters polled analysts anticipate revenue of $22.7 billion and EPS 0f $21.18 per share for 2009.

Google has a strong balance sheet with cash, cash equivalents and marketable securities balance approaching $17.8 billion at March 31, 2009. Cash provided by operating activities in the first quarter of 2009 was $2,249.5 million compared to $1,779.4 million in the first quarter of 2008.

Google Inc. (Nasdaq: GOOG)

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Analyst: Victor Sula, Ph.D. Initial Report July 9th, 2009

Technical Analysis

Google is below its 13 day moving average. This bearish sign is even more significant because the moving average is also trending lower.

The MACD for Google currently indicates a strong bearish signal for two reasons. First, the MACD is below the signal line, a 9day moving average. Second, the MACD is below the critical level of 0, which implies that the underlying moving averages are trending lower.

Insider Trading Activity NET SHARE PURCHASE ACTIVITY Insider Purchases - Last 6 Months

Purchases Sales Net Shares Purchased (Sold) Total Insider Shares Held % Net Shares Purchased (Sold)

Shares

Trans

N/A 142,149 (142,149)

0 59 59

1.49M (8.7%)

N/A N/A

Data provided by Thomson Financial

Google Inc. (Nasdaq: GOOG)

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Analyst: Victor Sula, Ph.D. Initial Report July 9th, 2009

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All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, Ph.D, the author of this report, certify that the material and views presented herein represent my personal opinion regarding the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compensation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own and shares or securities in any of the companies featured in this report.

Victor Sula, Ph.D. - Senior Analyst Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr. Sula held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D. degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level III candidate in the CFA program.

Google Inc. (Nasdaq: GOOG)

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