Google Earnings - Nice Call by Piper's Munster

Piper Jaffray's Gene Munster must feel like a champ following Google (GOOG) results out last night (see transcript). Munster retained his positive stance & Street high targets on the stock even after most other firms took down their numbers and ratings following comScore data that (falsely) indicated a slowdown in the company's search business. Here's what the analyst has to say this AM:

Last night's results are a reminder to stay focused on the big picture, vs. month to month performance data. As for the big picture, we continue to believe Google will begin to see measurable contribution from Doubleclick, YouTube, and general improvement in consumer search during the second half of 2008. Additionally, Google's major competitors (Microsoft, Yahoo, AOL, and Fox Interactive) continue to seek leverage in Yahoo takeover/merger talks, which we believe may prevent them from executing any near term strategies to compete with Google. Meanwhile, recent Wall Street Journal reports suggest Google is getting closer to signing a deal with Yahoo to outsource search.

What About Paid Clicks? The street was bracing for Google to report a miss in paid clicks given recent third party data. In defense of the third party data, it did accurately predict the direction of paid click growth and Google reports paid clicks on a worldwide basis. Therefore, paid clicks in the U.S. conceivably could be closer to what comScore suggested. Google's paid clicks were up 20%y/y, vs up 30% in December, and up 45% in March. The key take away: Paid clicks are difficult to predict and dismiss an important factor: revenue per click. Google appears to have a strong handle on balancing the relationship between paid clicks and revenue per click.

The $842 Million Question. Google spent $842m in CAPEX (on land and data centers) for Q1 vs $678m in Q4 last year, a 24% increase. To put this in perspective, this is more than Amazon, eBay, or Yahoo ($224m, $454m, $602m) spent individually for all of last year. Microsoft is spending similar numbers per quarter to Google, but their spending is spread across various business lines while Google's spending is purely on internet offerings. The bottom line is that we believe it will be difficult for any Google competitors to compete against the sheer scale of Google's technology empire.

Munster ups his target on GOOG stock to $819 from $790 (both Street high) and maintains Buy rating.

Notablecalls: So GOOG managed to come in-line with consensus. Great! Guess it deserves to trade around $520+. I think short covering played an important role in last night's upside move.

No edge here. Just fyi.