FINANCIAL ANALYSIS

Financial Analysis on Google

Executive Summary

In today's vocabulary, the words "Google" and "search" are practically interchangeable. An average user searches on the Internet at least twice, on a daily basis. In 2010, these searches generated about 20 billion clicks per month. Apparently, it seems to be a very minor activity, but it has generated billions of dollars of revenues for the company. As the market leader, Google maintains more than 60% of the market share worldwide; no any other search engine has even 10%. Google is being used for the purpose of information searching since the days people started using the internet. The reason can be attributed to the fact that Google was the very first search engine that was being publicized at such large scale, and users have got so familiar with it that they have gotten habitual of using it.

The company registered in 1998, offers advertising, worldwide internet search services and hosted applications. Gmail, Google Chrome, Google Earth, Google plus are some of its products. The company's financials vindicate the health of the company. Google is very strong and stable company in terms of financial management. Company's share price is well ahead of its competitors. The statements and tables attached in the Appendix reflect an increasing trend in all the positive indicators. Google is considered as a recession resistant company, as it has been immune to the economic uproar in recent times. Moreover, the company has recently entered in the public debt market, at very favourable conditions. In a nutshell, it can be concluded that the company is attractive from investment perspective. Potential investors are advised to buy the company's shares.

Table of Contents

Executive Summaryii

Introduction1

History of Google Inc.1

Business Description1

Competitor Analysis2

Financial Analysis3

Opinion of Bulls5

Opinion of Bears5

Beta Analysis6

Analysis of the Financial Ratios6

Recent Happenings and Updates6

Conclusion and Recommendations7

References9

Appendix10

EXHIBIT 1: Comparison of Share price10

EXHIBIT 2: Ratio Analysis11

EXHIBIT 3: Search Engine Market Share11

EXHIBIT 4: Income Statement12

EXHIBIT 5: Balance Sheet13

EXHIBIT 6: Cash Flow Statement14

Financial Analysis on Google

Introduction

Way back in 1996, Stanford University graduate students Larry Page and Sergey Brin built a search engine called “BackRub” that used links to determine the importance of individual web pages which led to www.google.com in 1998 (Woodford, 2005, p.150). Since then, it is the world's most widely used search engine. This paper evaluates the performance of Google and provides a comprehensive financial analysis of the company. Moreover, it also analyzes the competitive environment of the industry, the trends of the critical financial indicator and present recommendations whether or not to invest in company's shares.

History of Google Inc.

The history of Google dates back to the 1990s when Stanford University graduate students, Sergey and Larry, worked together to innovate a technology for a search engine. They named it BackRub because of its unique ability to analyze the back links referring to a given website. After two years, they gathered USD 1 million funds from private investors and venture capitalists to launch Google. Google was incorporated in 1998 (Duthe, 2008, p.22).

Business Description

Google Inc. provides advertising and global internet search services and hosted ...