WACC

Beta: 1.110

Risk Premium: 4.50%

Risk Free Rate: 3.71%



Tax Rate: 22%









Cost of Equity: 8.71%



Cost of Debt: 0.00%





WACC: 8.71%







Terminal Beta 1



Terminal WACC 8.2100%

Google (GOOG)

ANALYSTS: Amir Farry,

Brandon Kurkela, Sean Monga,

Kyle Samani, Harsh Sinha







LEGEND

Inputs

Formulas

Unique Formulas









Historical



2006A 2007A 2008A 2009A

(in millions)



Revenues 10,605 16,594 21,796 23,651

% Growth 56.5% 31.3% 8.5%

COGS 4,225 6,649 8,622 8,844

% Growth 57.4% 29.7% 2.6%

Margin 39.8% 40.1% 39.6% 37.4%

Gross Profit 6,380 9,945 13,174 14,806

Margin 60.2% 59.9% 60.4% 62.6%



R&D 1,229 2,120 2,793 2,843

% of Sales 11.6% 12.8% 12.8% 12.0%



SG&A 1,601 2,741 3,749 3,651

% of Sales 15.1% 16.5% 17.2% 15.4%



Unusual Expense 0 0 1,095 0

% of Sales 0.0% 0.0% 5.0% 0.0%



Operating Income (EBIT) 3,550 5,084 5,537 8,312

Margin 33.5% 30.6% 25.4% 35.1%



Taxes 934 1,470 1,627 1,861

Effective Tax Rate 26.3% 28.9% 29.4% 22.4%



Net Income 2,616 3,614 3,910 6,451

Net Margin 24.7% 21.8% 17.9% 27.3%



Dep. & Amortization 572 968 1,500 1,524

% of Sales 5.4% 5.8% 6.9% 6.4%

- Change in NWC 44 279 295 466

% of Sales -% 1.7% 1.4% 2.0%



Free Cash Flow to Firm 3,144 4,303 5,115 7,509



Present Value Factor

Present Value of FCFF



Terminal Value

Present Value of TV









Le

Eq

Co

Im

Cu



Up

Key Model Assumptions

Beta 1.11

Market Risk Premium 4.50%

Risk Free Rate 3.71%

Tax Rate 27%

Cost of Equity 8.71%

After-tax Cost of Debt 0.00%

WACC 8.71%

Terminal WACC 8.21%

Terminal Growth Rate 2.50%





Projected

1 2 3 4 5 6 7

2010E 2011E 2012E 2013E 2014E 2015E Terminal





27,931 31,474 35,566 40,011 44,813 49,966 51,715

18.1% 12.7% 13.0% 12.5% 12.0% 11.5% 2.5%

10,334 11,645 13,159 14,804 16,581 18,487 19,135

16.9% 12.7% 13.0% 12.5% 12.0% 11.5% 3.5%

37.0% 37.0% 37.0% 37.0% 37.0% 37.0% 37.0%

17,597 19,829 22,406 25,207 28,232 31,479 32,580

63.0% 63.0% 63.0% 63.0% 63.0% 63.0% 63.0%



3,352 3,777 4,268 4,801 5,378 5,996 6,206

12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0%



4,190 4,721 5,335 6,002 6,722 7,495 7,757

15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0%



0 0 0 0 0 0 0

0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%



10,055 11,331 12,804 14,404 16,133 17,988 18,617

36.0% 36.0% 36.0% 36.0% 36.0% 36.0% 36.0%



2,690 3,031 3,425 3,853 4,315 4,812 4,980

26.8% 26.8% 26.8% 26.8% 26.8% 26.8% 26.8%



7,365 8,300 9,379 10,551 11,817 13,176 13,637

26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4%



1,843 2,077 2,347 2,641 2,958 3,298 3,413

6.6% 6.6% 6.6% 6.6% 6.6% 6.6% 6.6%

559 692 818 1,040 1,300 1,549 1,758

2.0% 2.2% 2.3% 2.6% 2.9% 3.1% 3.4%



8,650 9,685 10,908 12,151 13,475 14,925 15,292



100.00% 91.99% 84.63% 77.85% 71.61% 65.88% 60.60%

8,650 8,909 9,231 9,460 9,650 9,832 9,268



274,508

180,845





NPV of Operating CF 26.4% 65,000

NPV of Terminal Value 73.6% 180,845



Value of Operating Business 245,846

Add: Cash 26,500

Less: Debt -

Equity Value 272,346

Common Shares Oustanding 318,410,000

Implied Fair Value Per Share $855.33

Current Share Price $525.70



Upside Potential 62.7%

Date GOOG % Change NASDAQ % Change

4/26/2010 532 (2.38%) 2511.92 (0.72%)

4/19/2010 544.99 (0.94%) 2530.15 1.97%

4/12/2010 550.15 (2.84%) 2481.26 1.11%

4/5/2010 566.22 (0.45%) 2454.05 2.14%

3/29/2010 568.8 1.09% 2402.58 0.31%

3/22/2010 562.69 0.48% 2395.13 0.87%

3/15/2010 560 (3.37%) 2374.41 0.29%

3/8/2010 579.54 2.72% 2367.66 1.78%

3/1/2010 564.21 7.10% 2326.35 3.94%

2/22/2010 526.8 (2.58%) 2238.26 (0.25%)

2/16/2010 540.76 1.43% 2243.87 2.76%

2/8/2010 533.12 0.34% 2183.53 1.98%

2/1/2010 531.29 0.25% 2141.12 (0.29%)

1/25/2010 529.94 (3.65%) 2147.35 (2.63%)

1/19/2010 550.01 (5.17%) 2205.29 (3.61%)

1/11/2010 580 (3.66%) 2287.99 (1.26%)

1/4/2010 602.02 (2.90%) 2317.17 2.12%

12/28/2009 619.98 0.24% 2269.15 (0.72%) `

12/21/2009 618.48 3.70% 2285.69 3.35%

12/14/2009 596.42 1.00% 2211.69 0.98%

12/7/2009 590.51 0.94% 2190.31 (0.18%)

11/30/2009 585.01 0.91% 2194.35 2.61%

11/23/2009 579.76 1.72% 2138.44 (0.35%)

11/16/2009 569.96 (0.37%) 2146.04 (1.01%)

11/9/2009 572.05 3.80% 2167.88 2.62%

11/2/2009 551.1 2.79% 2112.44 3.29%

10/26/2009 536.12 (3.17%) 2045.11 (5.08%)

10/19/2009 553.69 0.70% 2154.47 (0.11%)

10/12/2009 549.85 6.51% 2156.8 0.82%

10/5/2009 516.25 6.54% 2139.28 4.45%

9/28/2009 484.58 (1.60%) 2048.11 (2.05%)

9/21/2009 492.48 0.21% 2090.92 (1.97%)

9/14/2009 491.46 4.09% 2132.86 2.50%

9/8/2009 472.14 2.35% 2080.9 3.08%

8/31/2009 461.3 (0.74%) 2018.78 (0.49%)

8/24/2009 464.75 (0.11%) 2028.77 0.39%

8/17/2009 465.24 1.14% 2020.9 1.78%

8/10/2009 460 0.63% 1985.52 (0.74%)

8/3/2009 457.1 3.17% 2000.25 1.10%

7/27/2009 443.05 (0.82%) 1978.5 0.64%

7/20/2009 446.72 3.83% 1965.96 4.21%

7/13/2009 430.25 3.82% 1886.61 7.44%

7/6/2009 414.4 1.45% 1756.03 (2.25%)

6/29/2009 408.49 (3.96%) 1796.52 (2.27%)

6/22/2009 425.32 1.24% 1838.22 0.59%

6/15/2009 420.09 (1.12%) 1827.47 (1.69%)

6/8/2009 424.84 (4.38%) 1858.8 0.51%

6/1/2009 444.32 6.49% 1849.42 4.23%

5/26/2009 417.23 6.03% 1774.33 4.87%

5/18/2009 393.5 0.90% 1692.01 0.71%

5/11/2009 390 (4.25%) 1680.14 (3.38%)

5/4/2009 407.33 3.46% 1739 1.15%

4/27/2009 393.69 1.08% 1719.2 1.47%

4/20/2009 389.49 (0.70%) 1694.29 1.27%

4/13/2009 392.24 5.30% 1673.07 1.24%

4/6/2009 372.5 0.74% 1652.54 1.89%

3/30/2009 369.78 6.35% 1621.87 4.96%

3/23/2009 347.7 5.31% 1545.2 6.03%

3/16/2009 330.16 1.77% 1457.27 1.80%

3/9/2009 324.42 5.14% 1431.5 10.64%

3/2/2009 308.57 (8.70%) 1293.85 (6.10%)

2/23/2009 337.99 (2.44%) 1377.84 (4.40%)

2/17/2009 346.45 (3.14%) 1441.23 (6.07%)

2/9/2009 357.68 (3.66%) 1534.36 (3.60%)

2/2/2009 371.28 9.67% 1591.71 7.81%

1/26/2009 338.53 4.26% 1476.42 (0.06%)

1/20/2009 324.7 8.35% 1477.29 (3.40%)

1/12/2009 299.67 (4.89%) 1529.33 (2.69%)

1/5/2009 315.07 (1.95%) 1571.59 (3.71%)

12/29/2008 321.32 6.98% 1632.21 6.66%

12/22/2008 300.36 (3.16%) 1530.24 (2.18%)

12/15/2008 310.17 (1.77%) 1564.32 1.53%

12/8/2008 315.76 11.19% 1540.72 2.08%

12/1/2008 283.99 (3.06%) 1509.31 (1.71%)

11/24/2008 292.96 11.63% 1535.57 10.92%

11/17/2008 262.43 (15.35%) 1384.35 (8.74%)

11/10/2008 310.02 (6.38%) 1516.85 (7.92%)

11/3/2008 331.14 (7.85%) 1647.4 (4.27%)

10/27/2008 359.36 5.92% 1720.95 10.88%

10/20/2008 339.29 (8.93%) 1552.03 (9.31%)

10/13/2008 372.54 12.21% 1711.29 3.75%

10/6/2008 332 (14.19%) 1649.51 (15.30%)

9/29/2008 386.91 (10.24%) 1947.39 (10.81%)

9/22/2008 431.04 (4.03%) 2183.34 (3.98%)

9/15/2008 449.15 2.63% 2273.9 0.56%

9/8/2008 437.66 (1.48%) 2261.27 0.24%

9/2/2008 444.25 (4.11%) 2255.88 (4.72%)

8/25/2008 463.29 (5.56%) 2367.52 (1.95%)

8/18/2008 490.59 (3.83%) 2414.71 (1.54%)

8/11/2008 510.15 3.06% 2452.52 1.59%

8/4/2008 495.01 5.80% 2414.1 4.46%

7/28/2008 467.86 (4.90%) 2310.96 0.02%

7/21/2008 491.98 2.21% 2310.53 1.22%

7/14/2008 481.32 (9.83%) 2282.78 1.95%

7/7/2008 533.8 (0.60%) 2239.08 (0.28%)

6/30/2008 537 1.69% 2245.38 (3.03%)

6/23/2008 528.07 (3.36%) 2315.63 (3.76%)

6/16/2008 546.43 (4.39%) 2406.09 (1.97%)

6/9/2008 571.51 0.80% 2454.5 (0.81%)

6/2/2008 567 (3.21%) 2474.56 (1.91%)

5/27/2008 585.8 7.56% 2522.66 3.19%

5/19/2008 544.62 (6.11%) 2444.67 (3.33%)

5/12/2008 580.07 1.20% 2528.85 3.41%

5/5/2008 573.2 (1.39%) 2445.52 (1.27%)

4/28/2008 581.29 6.84% 2476.99 2.23%

4/21/2008 544.06 0.86% 2422.93 0.83%

4/14/2008 539.41 17.92% 2402.97 4.92%

4/7/2008 457.45 (2.90%) 2290.24 (3.41%)

3/31/2008 471.09 7.54% 2370.98 4.86%

3/24/2008 438.08 1.04% 2261.18 0.14%

3/17/2008 433.55 (1.00%) 2258.11 2.06%

3/10/2008 437.92 1.05% 2212.49 -%

3/3/2008 433.35 (8.03%) 2212.49 (2.60%)

2/25/2008 471.18 (7.21%) 2271.48 (1.38%)

2/19/2008 507.8 (4.12%) 2303.35 (0.79%)

2/11/2008 529.64 2.51% 2321.8 0.74%

2/4/2008 516.69 0.15% 2304.85 (4.50%)

1/28/2008 515.9 (8.92%) 2413.36 3.75%

1/22/2008 566.4 (5.64%) 2326.2 (0.59%)

1/14/2008 600.25 (5.95%) 2340.02 (4.10%)

1/7/2008 638.25 (2.85%) 2439.94 (2.58%)

12/31/2007 657 (6.48%) 2504.65 (6.35%)

12/24/2007 702.53 0.84% 2674.46 (0.65%)

12/17/2007 696.69 0.98% 2691.99 2.13%

12/10/2007 689.96 (3.48%) 2635.74 (2.60%)

12/3/2007 714.87 3.16% 2706.16 1.70%

11/26/2007 693 2.41% 2660.96 2.48%

11/19/2007 676.7 6.80% 2596.6 (1.54%)

11/12/2007 633.63 (4.57%) 2637.24 0.35%

11/5/2007 663.97 (6.65%) 2627.94 (6.49%)

10/29/2007 711.25 5.43% 2810.38 0.22%

10/22/2007 674.6 4.64% 2804.19 2.90%

10/15/2007 644.71 1.15% 2725.16 (2.87%)

10/8/2007 637.39 7.30% 2805.68 0.91%

10/1/2007 594.05 4.72% 2780.32 2.92%

9/24/2007 567.27 1.28% 2701.5 1.13%

9/17/2007 560.1 5.93% 2671.22 2.65%

9/10/2007 528.75 1.81% 2602.18 1.42%

9/4/2007 519.35 0.80% 2565.7 (1.18%)

8/27/2007 515.25 0.05% 2596.36 0.76%

8/20/2007 515 2.99% 2576.69 2.86%

8/13/2007 500.04 (3.05%) 2505.03 (1.57%)

8/6/2007 515.75 2.53% 2544.89 1.34%

7/30/2007 503 (1.74%) 2511.25 (1.99%)

7/23/2007 511.89 (1.58%) 2562.24 (4.66%)

7/16/2007 520.12 (5.80%) 2687.6 (0.72%)

7/9/2007 552.16 2.37% 2707 1.52%

7/2/2007 539.4 3.19% 2666.51 2.43%

6/25/2007 522.7 (0.43%) 2603.23 0.55%

6/18/2007 524.98 3.77% 2588.96 (1.44%)

6/11/2007 505.89 (1.86%) 2626.71 2.07%

6/4/2007 515.49 3.02% 2573.54 (1.54%)

5/29/2007 500.4 3.49% 2613.92 2.22%

5/21/2007 483.52 2.81% 2557.19 (0.05%)

5/14/2007 470.32 0.77% 2558.45 (0.15%)

5/7/2007 466.74 (0.93%) 2562.22 (0.39%)

4/30/2007 471.12 (1.65%) 2572.15 0.58%

4/23/2007 479.01 (0.72%) 2557.21 1.22%

4/16/2007 482.48 3.47% 2526.39 1.38%

4/9/2007 466.29 (1.11%) 2491.94 0.83%

4/2/2007 471.51 2.91% 2471.34 2.05%

3/26/2007 458.16 (0.79%) 2421.64 (1.11%)

3/19/2007 461.83 4.76% 2448.93 3.21%

3/12/2007 440.85 (2.67%) 2372.66 (0.62%)

3/5/2007 452.96 3.26% 2387.55 0.83%

2/26/2007 438.68 (6.79%) 2368 (5.85%)

2/20/2007 470.62 0.14% 2515.1 0.75%

2/12/2007 469.94 1.74% 2496.31 1.48%

2/5/2007 461.89 (4.07%) 2459.82 (0.65%)

1/29/2007 481.5 (2.89%) 2475.88 1.66%

1/22/2007 495.84 1.24% 2435.49 (0.65%)

1/16/2007 489.75 (3.02%) 2451.31 (2.06%)

1/8/2007 505 3.66% 2502.82 2.82%

1/3/2007 487.19 5.80% 2434.25 0.78%

12/26/2006 460.48 1.08% 2415.29 0.59%

12/18/2006 455.58 (5.15%) 2401.18 (2.28%)

12/11/2006 480.3 (0.79%) 2457.2 0.81%

12/4/2006 484.11 0.69% 2437.36 1.00%

11/27/2006 480.8 (4.79%) 2413.21 (1.91%)

11/20/2006 505 1.25% 2460.26 0.59%

11/13/2006 498.79 5.33% 2445.86 2.35%

11/6/2006 473.55 0.37% 2389.72 2.53%

10/30/2006 471.8 (0.72%) 2330.79 (0.84%)

10/23/2006 475.2 3.38% 2350.62 0.36%

10/16/2006 459.67 7.58% 2342.3 (0.64%)

10/9/2006 427.3 1.62% 2357.29 2.49%

10/2/2006 420.5 4.63% 2299.99 1.84%

9/25/2006 401.9 (0.47%) 2258.43 1.78%

9/18/2006 403.78 (1.49%) 2218.93 (0.75%)

9/11/2006 409.88 8.48% 2235.59 3.22%

9/5/2006 377.85 (0.20%) 2165.79 (1.25%)

8/28/2006 378.6 1.43% 2193.16 2.47%

8/21/2006 373.26 (2.63%) 2140.29 (1.09%)

8/14/2006 383.36 4.03% 2163.95 5.16%

8/7/2006 368.5 (1.43%) 2057.71 (1.31%)

7/31/2006 373.85 (3.68%) 2085.05 (0.43%)

7/24/2006 388.12 (0.51%) 2094.14 3.65%

7/17/2006 390.11 (3.32%) 2020.39 (0.83%)

7/10/2006 403.5 (4.03%) 2037.35 (4.35%)

7/3/2006 420.45 0.27% 2130.06 (1.94%)

6/26/2006 419.33 3.57% 2172.09 2.39%

6/19/2006 404.86 3.62% 2121.47 (0.40%)

6/12/2006 390.7 1.07% 2129.95 (0.24%)

6/5/2006 386.57 1.88% 2135.06 (3.80%)

5/30/2006 379.44 (0.50%) 2219.41 0.41%

5/22/2006 381.35 3.06% 2210.37 0.75%

5/15/2006 370.02 (1.10%) 2193.88 (2.22%)

5/8/2006 374.13 (5.12%) 2243.78 (4.22%)

5/1/2006 394.3 (5.66%) 2342.57 0.86%

4/24/2006 417.94 (4.38%) 2322.57 (0.87%)

4/17/2006 437.1 8.69% 2342.86 0.72%

4/10/2006 402.16 (0.98%) 2326.11 (0.55%)

4/3/2006 406.16 4.14% 2339.02 (0.03%)

3/27/2006 390 6.62% 2339.79 1.17%

3/20/2006 365.8 7.65% 2312.82 0.27%

3/13/2006 339.79 0.68% 2306.48 1.96%

3/6/2006 337.5 (10.76%) 2262.04 (1.76%)

2/27/2006 378.18 0.21% 2302.6 0.68%

2/21/2006 377.4 2.35% 2287.04 0.21%

2/13/2006 368.75 1.69% 2282.36 0.91%

2/6/2006 362.61 (4.96%) 2261.88 (0.03%)

1/30/2006 381.55 (11.98%) 2262.58 (1.81%)

1/23/2006 433.49 8.52% 2304.23 2.52%

1/17/2006 399.46 (14.32%) 2247.7 (2.99%)

1/9/2006 466.25 0.13% 2317.04 0.50%

1/3/2006 465.66 12.25% 2305.62 4.55%

12/27/2005 414.86 (3.73%) 2205.32 (1.96%)

12/19/2005 430.93 0.18% 2249.42 (0.14%)

12/12/2005 430.15 5.12% 2252.48 (0.19%)

12/5/2005 409.2 (2.03%) 2256.73 (0.73%)

11/28/2005 417.7 (2.55%) 2273.37 0.46%

11/21/2005 428.62 7.10% 2263.01 1.61%

11/14/2005 400.21 2.51% 2227.07 1.12%

11/7/2005 390.4 (0.01%) 2202.47 1.52%

10/31/2005 390.43 9.01% 2169.43 3.81%

10/24/2005 358.17 5.38% 2089.88 0.37%

10/17/2005 339.9 14.78% 2082.21 0.84%

10/10/2005 296.14 (5.38%) 2064.83 (1.22%)

10/3/2005 312.99 (1.10%) 2090.35 (2.85%)

9/26/2005 316.46 0.35% 2151.69 1.65%

9/19/2005 315.36 5.05% 2116.84 (2.01%)

9/12/2005 300.2 0.37% 2160.35 (0.70%)

9/6/2005 299.09 3.69% 2175.51 1.61%

8/29/2005 288.45 1.72% 2141.07 0.96%

8/22/2005 283.58 1.28% 2120.77 (0.69%)

8/15/2005 280 (3.35%) 2135.56 (0.99%)

8/8/2005 289.72 (0.90%) 2156.9 (0.96%)

8/1/2005 292.35 1.60% 2177.91 (0.32%)

7/25/2005 287.76 (4.84%) 2184.83 0.23%

7/18/2005 302.4 0.40% 2179.74 1.06%

7/11/2005 301.19 1.67% 2156.78 2.08%

7/5/2005 296.23 1.71% 2112.88 2.70%

6/27/2005 291.25 (2.02%) 2057.37 0.20%

6/20/2005 297.25 6.05% 2053.27 (1.76%)

6/13/2005 280.3 (0.78%) 2090.11 1.31%

6/6/2005 282.5 0.80% 2063 (0.41%)

5/31/2005 280.26 5.36% 2071.43 (0.21%)

5/23/2005 266 10.09% 2075.73 1.43%

5/16/2005 241.61 5.40% 2046.42 3.52%

5/9/2005 229.24 0.54% 1976.78 0.48%

5/2/2005 228.02 3.65% 1967.35 2.38%

4/25/2005 220 1.94% 1921.65 (0.55%)

4/18/2005 215.81 16.65% 1932.19 1.26%

4/11/2005 185 (3.67%) 1908.15 (4.56%)

4/4/2005 192.05 6.67% 1999.35 0.73%

3/28/2005 180.04 0.44% 1984.81 (0.31%)

3/21/2005 179.25 (0.44%) 1991.06 (0.83%)

3/14/2005 180.04 1.26% 2007.79 (1.66%)

3/7/2005 177.8 (4.36%) 2041.6 (1.40%)

2/28/2005 185.9 0.02% 2070.61 0.25%

2/22/2005 185.87 (6.10%) 2065.4 0.33%

2/14/2005 197.95 5.63% 2058.62 (0.87%)

2/7/2005 187.4 (8.30%) 2076.66 (0.48%)

1/31/2005 204.36 7.37% 2086.66 2.50%

1/24/2005 190.34 1.09% 2035.83 0.08%

1/18/2005 188.28 (5.85%) 2034.27 (2.57%)

1/10/2005 199.97 3.16% 2087.91 (0.03%)

1/3/2005 193.85 0.55% 2088.61 (3.99%)

12/27/2004 192.79 2.60% 2175.44 0.69%

12/20/2004 187.9 4.34% 2160.62 1.19%

12/13/2004 180.08 4.91% 2135.2 0.34%

12/6/2004 171.65 (4.85%) 2128.07 (0.93%)

11/29/2004 180.4 0.56% 2147.96 2.19%

11/22/2004 179.39 5.90% 2101.97 1.51%

11/15/2004 169.4 (6.92%) 2070.63 (0.71%)

11/8/2004 182 7.47% 2085.34 2.28%

11/1/2004 169.35 (11.17%) 2038.94 3.24%

10/25/2004 190.64 10.56% 1974.99 3.13%

10/18/2004 172.43 19.65% 1915.14 0.19%

10/11/2004 144.11 4.63% 1911.5 (0.44%)

10/4/2004 137.73 3.88% 1919.97 (1.14%)

9/27/2004 132.58 10.64% 1942.2 3.34%

9/20/2004 119.83 1.99% 1879.48 (1.60%)

9/13/2004 117.49 11.54% 1910.09 0.83%

9/7/2004 105.33 5.32% 1894.31 2.70%

8/30/2004 100.01 (5.78%) 1844.48 (0.95%)

8/23/2004 106.15 (1.99%) 1862.09 1.31%

8/19/2004 108.31 1838.02 #DIV/0!

1.0498