Google Knows How To Cover All The Angles

| About: Alphabet, Inc. (GOOG)
This article is now exclusive for PRO subscribers.

One thing that particularly draws me in towards Google (NASDAQ:GOOG) is the incomparable knack it has for versatility. The search engine giant has mastered the art of filtering through whichever niche and emerging a lead player.

While Google's playground predominantly revolves around its flagship search engine and its iconic Android operating system, the avid tech player is not restrained. In a display of tact and innovation, Google has stepped outside its track of usual operation. It will extend a peerless Internet service in Kansas City.

When I say peerless, I truly mean it. Not only will this effort, dubbed Google Fiber, extend speeds up to 1 Gigabyte per second (10 times faster than average U.S. connection) but it will also provide fast Internet to at least 180 of 202 neighborhoods in Kansas City.

This shows that Google is working a unique angle. While most of its core competitors like Apple (NASDAQ:AAPL) focus on smartphones and tablets, Google is trying to expand its reach to other overlooked sectors in the tech industry.

I believe that this is instrumental in offering more favorable long term prospects. From this alone, Google actually stands better placed than a competitor like Apple.

Focusing on Google's core market of smartphones and tablets, the bigwig is not lagging behind. Despite the bubbling rivalry that is brewing between Google and Apple, I am impressed by Google's ability to still hold its ground. The launch of Apple's iPhone 5 has and will continue to send a lot of ripples down the smartphone market. However, I am not fully convinced that this new 'revolutionary smartphone'- as fanatics put it - will greatly affect Google's market share.

Google is always a step ahead. Its Android OS supports Samsung's Galaxy S3, iPhone 5's core rival. The Galaxy S3 was launched some time back and already has reasonable command over the market. The iPhone 5 will have to scrap in the remaining share of the market that is not already covered by the Galaxy S3.

The second quarter will pay off

With regards to Google always being a step ahead, I have been compelled to take a sneak peek into the second quarter. Many of the things that Google did then will begin paying off right now or in the near future.

Take a look at the launch of the Google Nexus. This tablet is specifically aimed at rallying competition against Amazon's (NASDAQ:AMZN) Kindle and Apple's iPad during the holiday season. Take note that Google launched the Nexus some time back, giving it ample time to garner a following and secure anchorage in the market. Amazon and Apple, however, lag behind. In fact, Apple's plans for a new iPad are still in the pipeline and the launch of the iPad mini is slated for October. This shows that Google is always ahead, sometimes planning for things months before other competitors.

Still on the second quarter, I must say that I was impressed by the Motorola acquisition. While some critics expressed a skeptical outlook towards the whole idea of absorbing Motorola, I was impressed. Not only has Google expanded its footprint into the hardware niche, but the tech bigwig has also started experiencing some of the benefits of the acquisition.

A big percentage (almost 40 percent) of the revenue gleaned in the second quarter was attributable to the Motorola acquisition. Also, third quarter revenue is expected to rise more than 59 percent, and a big percentage of the rise will yet again be traced back to the Motorola acquisition. I believe that these expectations will fuel demand for Google's stock and send the stock price through the roof.

The only challenge that Google currently has regarding the Motorola acquisition is accounting for a lagging Earnings per Share. I, however, believe that an increase in the number of shareholders is to blame. Similarly, a face value judgment of the balance sheet may be misleading.

Remember - when Google acquired Motorola, it absorbed all of Motorola's bulging liabilities. This was clearly demonstrated at the close of the second quarter where the current ratio fell to 2.84 from 4.84 in Q1.

Knows how to handle competition

Another notable thing about Google is the tactful fashion through which it handles competition.

Looking at Yahoo (YHOO), there are signs that the fallen giant may soon rise up from the ashes. Mayer, the CEO, has been working around the clock and promises that the Chinese Alibaba asset sale will be officially closed in one week, gaining $7.1 billion for Yahoo. Yahoo has been in a protracted spat over its 40 percent stake (now to remain 20 percent after the close of the asset sale) in Alibaba. All said, Yahoo will use the money it collects from this transaction to expand its footprint and restore bullishness.

Facebook (NASDAQ:FB), on the other hand paints, an all too familiar story. It's been bears and losses ever since its debut into the public market. In fact, Zuckerberg - the CEO - addressed the public this week for the first time since Facebook joined NASDAQ. His address was marked by a bearish theme, signaling hopelessness and despair.

I believe that Facebook provides leeway for Google. Yahoo on the other hand extends no formidable threat. After all, Google did quell competition from Apple when the iPhone maker said that it would scrap YouTube from the iOS 6. Instead of reacting haphazardly, Google swiftly developed its own stand-alone YouTube application that is now available on iTunes for the iPhone 5 and other devices using the iOS 6.

As a round up, I believe that Google is a safer bet in the long run. It places its eggs in different baskets and watches all the baskets carefully - covers all the angles.

I would recommend a buy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.