Innovative Google is on Sale

Being the quant I am, everyone expects this post to be a comparison of Google (GOOG) to overpriced stocks like Baidu.com, Inc. (BIDU). Baidu.com is trading at a price to earnings ratio of 165 that seems somewhat extreme when compared to Google with a P/E just over 52.

But, I’m not heading there. It is more productive to find the details that make a firm great. An AP reporter Michael Liedtke has done just that, and posted a little piece that shows me once again how GOOG finds ways of increasing its reach in incredibly new ways. Innovation from a shareholders perspective is not measured by cool gadgets that wow audiences. It is measured by sustainable revenue, and the resulting profit by out maneuvering its competition. It is about building a brand that sustains its earnings multiple, and by being ubiquitous. With all the press on the Google phone, I like to highlight this project. It will not launch with ads, only coupons, but you know Google isn’t in it just to stretch its brand.

Lost drivers soon will be able to Google for help at the pump. As part of a partnership, the online search leader will dispense driving directions at thousands of gasoline pumps across the United States beginning early next month.

The pumps, made by Gilbarco Veeder-Root, include an Internet connection and will display Google's mapping service in color on a small screen. Motorists will be able to scroll through several categories to find local landmarks, hotels, restaurants and hospitals selected by the gas station's owner.

After the driver selects a destination, the pump will print out directions. Eventually, Gilbarco Veeder-Root hopes to enable motorists to type in a specific address and get directions.

Unlike most of Google's services, this one won't include ads bringing the company immediate revenue. But participating retailers will be able to make extra money from other merchants that offer coupons on the service.

Gilbarco Veeder-Root, a subsidiary of Danaher (DHR) is promoting the relationship on its web site, and it should. Being associated with another new form of media delivery extends its brand, capabilities, and revenue possibilities.

At the time of this writing, Google was down 5.5% for the week. Does this sound like a firm you want to short, or buy and hold? This project could be another foray of ultra-targeted national, and local advertising that brings another definition of the word “new” as in new media.

Disclosure: Mr. Corn is CEO of Clear Asset Management Inc. Mr. Corn holds no position in Danaher (DHR). Google (GOOG) is a holding in the Clear Large Cap Growth portfolio. Mr. Corn owns shares of (GOOG) directly through his participation in the portfolio.