Google Is Futuristic And Deserves A Higher P/E On Its Stock

| About: Alphabet Inc. (GOOG)

Google (NASDAQ:GOOG) is developing Google Glass, a wearable computing device. Google Glass will have a display and a camera, situated over the right eye, as well as audio input and output. It will feature a touch pad on the side and multiple sensors. The product can connect to the Internet via Wi-Fi radio and Bluetooth. Google Glass is rumored to be released publicly in 2014.

It's been three weeks since the company reported its fourth-quarter earnings. Since then the shares have soared almost 15% to reach an all-time high of $786. Google clearly has very high ambitions. The company has pushed itself into operating systems, smartphones, tablets, and most recently hardware.

According to SEC documents filed last Friday, Eric Schmidt, Google's executive chairman, who owns 7.2 million shares of the company, plans to sell 3.2 million shares. But I feel the shares are still undervalued. Google is gradually transforming itself into a tech conglomerate. And I feel the search giant deserves a far higher P/E multiple on its stock, just because of its efforts to change the world for the better.

Google Glass: The Future of Communication

The University of Washington alumnus Babak Parviz and his team look like something out of the future when they wear their new creation. According to Parviz, co-creator of Google Glass, these devices are the future of communication.

"Devices are becoming smaller," Parviz said at a talk in an overcrowded electrical engineering lecture hall. "They're becoming more mobile… they're becoming faster to use and to access. But what is next? What will actually make the world a better place?"

Google Glass has made the concept of a hands-free display a reality. Google patented the design and began product testing in April 2012. Parviz said there is a history of evolution in computing and communication technology. In the continuum of communication techniques, which currently begins with speech and ends with smartphones, Parviz believes Google Glass is the next innovation.

Google Glass will create Augmented Reality

Google Glass is Google's project to create augmented reality glasses.

What is Augmented Reality?

The core of augmented reality lies in accessing your computer hands free. People walk on the streets, oblivious to their surroundings, looking down at small, rectangular pieces of glass in their hands. Project Glass is an improvement over the current situation and will bring these people back to the real world, making them more aware of their surroundings.

The Glass is being designed for consumers, but the first clear business application may occur in warehouses. There are critics who say Google Glass "doesn't yet have a clear reason for being and may degrade reality rather than augment it." But augmented reality glasses do seem to serve a clear business purpose in the warehouse and beyond.

Augmented reality glasses may exceed the performance of Voice in a couple of scenarios. First, if products require extra scans to capture lot or serial codes, capturing those codes with the vision system may be faster. Second, pallet building optimization would probably work far better with augmented reality glasses than other types of solutions. Pallet building optimization is based upon showing a worker how to most effectively stack cases on a pallet to maximize cube, ensure light items are not crushed, and meet case grouping objectives.

Bone Conduction Technology will replace Audio Earpiece Technology

The Google Glass project is making use of bone conduction technology in order to transmit sound to the wearer of the device and save users from needing headphones. An internal transducer mechanism vibrates bones in the wearer's head, generating more vibrations in the cochlea (the fluid-filled part of the ear), turning all of these vibrations into what the wearer hears as sound.


Whatever you think of Project Glass, Google is reaching for something new, innovative, and futuristic. Perhaps the Street is not yet convinced about Google's initiatives, but no other tech company is doing something that will have a direct impact on how people see and hear.

So the conclusion is simple, if Schmidt plans to sell his shares, just buy them.

Disclosure: I am long GOOG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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