Google Inc (NASDAQ:GOOG) is currently working on “enhanced campaigns,” introduced in February, and currently mandatory for all advertisers, which bundles desktop, tablet and cellphone ads for all ad campaigns. Advertisers are given the option to opt out of cellphone ads, but are required to buy tablet ads. Google Inc (NASDAQ:GOOG) believes the new process will make it easier to reach customers who use a variety of devices. This also means that mobile ad prices will rise and should catch up to the higher prices charged for desktop ads. The financial results of Google’s attempt to prioritize mobile may take up to a year to become apparent.
Meanwhile, back at the Apple Inc. (NASDAQ:AAPL) ranch …
Investors applauded Apple Inc. (NASDAQ:AAPL)’sthird quarter results, which beat expectations. The company’s iPhone sales hit a record in June of 31.2 million units sold, while analysts predicted unit sales of 26.5 million. In contrast, the iPad had a significant drop in sales to 14.6 million versus 17 million sold in 2012, suggesting the price of the device might drop soon. Apple Inc. (NASDAQ:AAPL) also sold fewer Macs – 3.8 million units compared to 4 million in last year’s quarter. Tim Cook, Apple’s CEO, mentioned new products coming down the pipeline in the fall, around September, and into 2014. The company’s guidance for the fourth quarter is in line with market estimates — revenue between $34 billion and $37 billion and a gross margin of 36% to 37%.
My Foolish conclusion
Of the three stocks mentioned, Apple presents the best value, trading at 10 times 2014 earnings with a PEG ratio of .62. Apple’s current price is well below the high of $700 reached in September 2012, which presents an interesting buying opportunity before the company introduces new products later this year and in 2014.
Google and Microsoft shares are currently overvalued, possibly due to high expectations placed on a more profitable ad revenue system from Google and Microsoft’s devices employing an improved version of Windows and other innovative features. The effect of these initiatives may already be priced into share prices, so negative news concerning them may lead to further prices drops for Microsoft and Google shares.
Eileen Rojas has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Eileen is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article What’s Next For Microsoft and Google? originally appeared on Fool.com is written by Eileen Rojas.
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