JACKSON SECURITIES, LLC

Research for the Prudent Investor

Date 3/23/07 Google (GOOG): Earnings

Current Price $462.040
estimates revised, maintain BUY
52WK HI $513.00 • Industry: Internet Services
52WK LO $340.20 • GOOG: NASDAQ; $462.04
EPS (TTM) $9.94 • 12-month price target: $560.00
Shares Outstanding 313M Buy initiated 6/26/06: $404.22 Buy 7/21/06: $387.12
Market Cap. $142B Target: $500.00 Target: $500.00
Dividend Yield NA
Price/Earnings (TTM) 46X
Price/Sales (TTM) 13.5X
EV/Revenue (TTM) 12.5X
EV/EBITDA (TTM) 28X
EBITDA (TTM) $4.62B

Buy 2/01/07 Target: $560

Brian Bolan
Director of Research Company Description
Technology Google is an internet search and technology company that has
established itself as the leader in its growing market. Free downloads of
Jackson Securities, LLC
300 S. Wacker Dr., Suite 2450 applications, tools and other products have helped to fortify the brand
Chicago, IL 60606 which has come to stand for something more than just a search engine.
Ph: (312) 253-0578 Valuation and Recommendation:
Fax: (312) 986-0560
As a leader in a growing market, we see many opportunities for Google to
Skype: BBolan grow revenue, earnings and market share. We continue to recommend
bbolan@jacksonsecurities.com investors BUY shares of Google.

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Google (GOOG)

Summary

We are lowering our earnings estimates for Google because we

believe we were too bullish on the continued out performance of
the company. Recent data trends suggest that the company will
report a solid 1Q07, but we may have been a little too optimistic in
our estimates.

Earnings

We had previously estimated that Google would earn $3.71 a share

on $3.719B in revenue. In lowering our estimate to $3.52 and
$3.611B in revenue we remind investors that we are still among
the highest on Wall Street.

We are raising our TAC (traffic acquisition cost) estimates for the
quarter and the year, but lowering our expected tax rate below the
guidance level of 30%.

Valuation

Our valuation of Google has changed slightly, as we have assigned

a higher multiple to the stock which effectively keeps the price
target at its status quo of $560. We believe this higher multiple is
warranted for a company that continues to outperform across
numerous metrics. The market, however has seemed to be hesitant
of late to commit more of its available capital into the name, and it
has been stuck in a range.

At 39x earnings for 2007, we believe that $560 is relatively

conservative especially seeing as we have lowered our estimates to
a much more achievable level. Google is expected to release
earnings on or around April 18, 2007.

JACKSON Brian Bolan 2

SECURITIES, Director of Equity Research – Technology Research
LLC
Google (GOOG)

Source: Company reports, Jackson Securities

estimates

JACKSON Brian Bolan 3

Source: Google reports and Jackson Director of Equity Research – Technology Research
SECURITIES, Securities.
LLC
Disclosures:

Analyst Certification
I, Brian Bolan, hereby certify that the views expressed in this research report accurately reflect my personal views about
the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly,
related to the specific recommendations or views expressed in this research report. I may be compensated in part based
on the overall profitability of Jackson Securities, LLC, which includes earnings from investment banking and all other
aspects of the firm’s business.

Conflicts of interest:
Neither Jackson Securities nor any of its publishing analysts or their immediate family members has a position in the
securities described herein.

Compensation:
• The research analyst has not received compensation based upon investment banking revenues or from the subject
company in the last 12 months.
• Jackson Securities has not in the last 12 months managed or co-managed a public offering of securities, received
compensation for investment banking services from the subject company or any compensation for products or
services other than investment banking
• Jackson Securities does not expect to receive or intend to seek investment banking compensation from the
subject company in the next 3 months.

Position as Officer or Director:

Neither the research analysts nor members of their immediate households occupy positions as an officer or director with
the company/companies mentioned in this report.

Market Making:
Jackson Securities does not make a market in this stock

Explanation of Ratings:
Buy - Expected 12-month absolute performance of +10% or higher than the market price at which time
the rating was issued.
Hold - Expected 12-month absolute performance of +5% to –5% from the price at the time the rating was
issued.
Sell - Expected 12-month absolute performance of –10% or lower than the market price at which time the
rating was issued.

Distribution of Ratings:
Jackson Securities, LLC has a distribution of ratings among its coverage universe as follows:

Buys – 54.6% (18 of 33 active recommendations)

Holds – 42.4% (14 of 33 active recommendations)
Sells – 3.0% (1 of 33 active recommendations)

Jackson Securities has provided investment banking services within the previous 12 months with the following
percentage of the companies they have rated:

Buys – 0% (0 of 33 active recommendations)

Holds – 0% (0 of 33 active recommendations)

Brian Bolan
Research Analyst – Technology
Sells – 0% (0 of 33 active recommendations)

Risks: General economic conditions, economic slowdown/recession, adverse industry news.

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Disclaimer: This communication is neither an offer to sell nor a solicitation of an offer to buy any securities mentioned
herein. This material should not be construed as an offer to sell or the solicitation of an offer to buy any securities
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Brian Bolan
Research Analyst – Technology