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It's not been long since most of us feared the growth of Google (GOOG) slowing down. They've had a pretty quiet run in the recent past, shares had a very slow climb and things where looking saturated for Google. The company's current earnings is a reason for us not to panic, at least for now. Before another commenting war starts I'm going to paint a picture as to why I feel there are better options than Google. But for now, let's analyze why Google performance has been steady so far.

Google's still conquering the internet

I've come across quite a few articles that say "Google's dominance in the search engine market is over". Yes, the internet search market is evolving, does this mean Google is being pushed away? NO! 60% of PC users still use Google as their search engine and 90% of mobile users rely on Google for their searches. Basically, in the US the word Google defines searching the internet.

The paid clicks vs. cost per click patterns have been going through a different pattern last year. Paid clicks went up 42% and 33% in June and September of 2012 respectively, at the same time cost per click dipped 16% and 15%. From these figures, it's pretty obvious that Google is trying to manipulate CPC to generate more paid clicks. In the current quarter, Google has backed out from this plan and still saw a growth of 6% in their paid clicks. This shows how comfortable Google is right now as far as the search market is concerned. Bing and Yahoo search both seem to be stagnant and frustrated over Google's paid click growth.

Where's your Income Google?

It's ironic that the company's revenue increased 24% and the increase in non-GAAP EPS was a mere 12.11%. Why is it that Google is managing to generate hefty revenue and still suffer as far as EPS is concerned? Well, expenses might be the answer. Google has had growth in both revenue and EPS, but they've still not managed to pay dividends. I've stated in my previous article, Google has to start paying dividends or buy back shares to stay dominant in the game. Why is a company that generates $3.65 billion in free cash flow not able pay dividends? It's not like other options aren't available, maybe taking the profits on Google and moving on would be a smarter idea.

What are the other so called "options"?

Yes, I'm just going to say it. Apple (AAPL) and Microsoft (MSFT). I'm sure this is definitely going to fill the comments section below with long arguments, but do not look into what happened to these stocks in the past rather look at the figures and see what the future holds for these two giants.

Google pays no dividend and still trades around 17.15x the projected earnings for 2013, which results in a PEG ratio of 1.25, no dividends I repeat. Apple, with a PEG ratio of just 1.25 and a forward P/E ratio of 0.55 expects an earnings growth of 18.88% in the coming years. A dividend yield of 2% is an added bonus. Microsoft PEG ratio of 1.17 is a bit lower than Google which is nothing arguable, but a 3.3% yield to its investors is way better that Google's 0% yield.

The cash generation and balance sheet figures of Apple and Microsoft seem to outplay Google. Apple overtakes Google by 67% as far as relative cash to market cap value is concerned, Microsoft that the same time has 81% more. Certainly this does not mean that both Apple and Microsoft rule the world, but as far as the fight with Google is concerned they are quite a few billions ahead.

Apple and Microsoft over Google is quite a risky gamble, this is what everyone will have to say, but the fact of the matter is that Google does not pay investors their rightful dividends like Apple and Microsoft do, both Apple and Microsoft have better relative values and better cash to market cap values. Yes, Google is doing well like it always did, but as far as the near term is concerned Apple and Microsoft look far brighter.

Source: A Switch From Google Is What's Required Now