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Another major tech sector target was
Google(GOOG - Get Report), Apple's sometimes arch rival in the mobile phone business. Google is the world's biggest search engine, generating revenue from an estimated 20 billion monthly clicks on its paid advertising service -- a business that still generates more than 80% of the company's overall revenue.
Despite Google's reliance on search, the firm has been pushing into other businesses with the goal of becoming the hub of consumers' online lives. While these new initiatives have generated a following, they've largely been subsidized by the search business. We'll want to see profitability in Google's other units for all of those efforts to be justified.
At the same time, a massive hoard of cash puts Google at risk of overpaying for more potential acquisitions that won't be accretive to earnings.
The firm's most recent buy,
Motorola Mobility(MMI - Get Report) cheap -- but it's more of a defensive legal posturing for the firm's Android system than an attempt at immediately spawning a profitable mobile phone business. Still, investors should expect a $12 billion investment to do more than just protect a side business.
Last quarter, institutions bought 5.9 million shares of Google, hiking their total stakes in the firm to $103.8 billion. Expect a fair chunk of that buying to come from merger arbitrage trades. In the third quarter,
Julian Robertson's Tiger Management increased its position in the stock by 17.3%, while
Farallon Capital Management initiated a new 247,500-share position in Google.
Google shows up on recent lists of the
10 Best Revenue Growth Stocks for 2012 and
4 Stocks Set for Next-Gen Mobile Boost.