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    Olympia Capital Markets GrouEquity Researc

    12 May 201

    DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED AT THE END OF THE REPORT. Investors should consider Olympia CapitalMarkets Group Research as only a single factor in making their investment decision.

    Updating CoverageCompany Overview and Key Data

    Google

    (Nasdaq Global Markets: GOOG)

    BUY

    Share Price: $508.00

    Price Target: $700.00

    52-Week Range: $384.69 -$629.51

    Shares Outstanding: 322.6 million

    Market Capitalization: $164 billion

    Dividend Yield: NA

    Google Inc. maintains an index of Websites and otheronline content, and makes this information freely availablethrough its search engine to anyone with an Internetconnection. The Companys automated search technologyhelps people obtain nearly instant access to relevantinformation from its online index. The Company generatesrevenue primarily by delivering online advertising.

    Source: Bloomberg

    EPS Mar Jun Sept Dec FY2009A2010E

    $5.16$6.76A

    $5.36$6.79

    $5.89$7.12

    $6.79$7.33

    $23.21$28.00

    Source: Google Inc.. SEC filings and Olympia Capital Markets Group Estimates

    Brian Bolan1 773 413 0285 [email protected]

    12 May 2010

    Google Inc.(Nasdaq GM: GOOG)

    Mid Quarter Update

    SummarySearch Market Share update comScore qSearch released US search markshare data yesterday showing Google lost search share, but analysis shows ththe gains in market share by Yahoo! may be of particularly poor quality. We not anticipate these results to affect our model at this time.

    Android vs iPhone 1Q10 was an excellent quarter for the Android operatisystem with several high profile device launches in the quarter including thNexus One from Google. NPD released a report that states Android salaccounted for 28% of all smartphone sales in the quarter. The Nexus One mhave gone from savior to suspect in less than one quarter as its future loocloudy forcing us to reduce revenue estimates in each of the remaining quarte

    of 2010.

    Google Travel - recent rumors of a Google acquisition of ITA Software primethe pump for a Google Travel site that would focus on highly qualified traffic fthe online travel agents (OTAs) and the metasearch companies that operate the space.

    Tablet Talk - Verizon has confirmed that it is partnering with Google on a tabdevice that will compete directly with the instant success that is the iPad. Aannouncement for the Google Tablet could come at Google IO a developeconference scheduled for May 19-20.

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    Olympia Capital Markets Group Research Google (Nasdaq Global Markets: GOO

    12 May 2010 Olympia Capital Markets Group | 1 212 586 7525 | www.olympiany.com

    Inside

    Mid Quarter Details 3Nexus One 4

    Conclusion and Valuation 5

    Appendicies 6

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    Olympia Capital Markets Group Research Google (Nasdaq Global Markets: GOO

    12 May 2010 Olympia Capital Markets Group | 1 212 621 9696 | www.olympiany.com

    Mid Quarter Update Detail

    Search market share - comScore qSearch released US market share results yesterday thshowed Google loosing market share to both Bing and Yahoo!. Yahoo!'s gain is a direresult of Yahoo! News using slideshows that appear to comScore to be searches. Perceptiois often the reality and this interpretation may not reach all market participants and could b

    viewed as a negative for Google. Yahoo! management noted on its most recent conferencall that they believed they found a way to stabilize search market share and that they paparticular attention to the comScore releases. This leads us to believe that Yahohas implemented SEO tactics to "game the system" to achieve more favourable metrics.

    Share of Searches (%)Core Search EntityMar-10 Apr-10 Point Change

    Apr-10 vs.Mar-10

    Total Core Search 100.0% 100.0% N/AGoogle Sites

    65.1%

    64.4%

    -0.7

    Yahoo! Sites 16.9% 17.7% 0.8Microsoft Sites 11.7% 11.8% 0.1Ask Network 3.8% 3.7% -0.1AOL LLC Network 2.5% 2.4% -0.1Source: comScore qSearch

    Android beat iPhone - NPD report states that Android-based phones captured 28% of thmarket in 1Q10 compared to 21% for the iPhone and 36% for Blackberry. Android gaining momentum, but it still has a long way to go as it accounts for only 9% of total markshare. The launch of the Nexus One in the quarter certainly helped Google, but we belie

    that consumers are more impressed with the HTC Incredible. The Incredible received higpraise from several reviews, and consumers bought roughly 100,000 of them in the fiweekend of availability. Since that time, Verizon stores have not had any in stock ademand for the phone remains high as the two-week wait implies. This benefit to tAndroid platform may come at the expense of the Nexus One, which is not available in Mobile stores. Nexus One channel checks are much more difficult, but it appears as thouthere will be only one carrier of Nexus One as Verizon has focused instead on the Incrediband Sprint has focused on the HTC EVO 4G. We are reducing our sales estimates for tNexus One over the next 3 quarters.

    Google Travel -- Reports that Google has looked into buying ITA Software for $1 Billiohave sent a shockwave through the online travel agency (OTA) industry. ITA Softwaprovides complicated flight information to companies like Orbitz and Kayak.com. We beliethis is the first step in what will eventually be known as Google Travel. We believe thatGoogle Travel entity will serve as a vertical search space that will encourage all the OTA's allocate more budget to Google. Currently the metasearch players like Kayak and Fly.coare competing with traditional OTA's for keyword traffic from Google, so we can expectGoogle Travel vertical to find a way to make searches for travel related keywords moclickable. This could increase traffic to OTA's but it will certainly make that traffic moqualified and thus more expensive.

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    Olympia Capital Markets Group Research Google (Nasdaq Global Markets: GOO

    12 May 2010 Olympia Capital Markets Group | 1 212 621 9696 | www.olympiany.com

    Tablet Talk - After yesterdays close, Verizon CEO was quoted as saying his company aGoogle are working together on a tablet style computer. This product has been rumored fsome time and this conformation speaks more to Verizon not getting on the iPhone platforthan it does the Google Tablet. Its likely that an Android or Chrome OS-based tablet whave HTC as a primary manufacturer and could be announced by Google as early as neweek at Google IO. The developer conference would provide an ideal setting to announthe tablet in front of 3,000 developers. If that is the case, we would not be surprised if tNexus One continued on in a limited capacity as the focus shifts to the tablet. Based on tinstant success of the iPad, we believe a Google Tablet will be just as successful provideGoogle partners with a Best Buy or similar retailer. The web-only sales channel for tNexus One has to have played a major role in its disappointment to date.

    Nexus One

    We estimate that Google recognized about $100 million - $110 million in revenue from thNexus One in 1Q10. Unit sales estimates of approximately 186,000 to 205,000 suggestphone that is weaker than many had expected, especially compared to the 74 days it toothe iPhone to sell 1 million units. Some of the estimates imply a substantial uptick in un

    sold in the second half of March. We have produced a high and low end estimate of unsold below.

    Source: Flurry and Olympia Capital Markets Group estimates

    We are lowering our estimates for Nexus One sales in 2Q10, and throughout the remaindof the year. Most notably, we dropped our sales estimates in 4Q10 from $200 million roughly $100 million during the important holiday season.

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    Olympia Capital Markets Group Research Google (Nasdaq Global Markets: GOO

    12 May 2010 Olympia Capital Markets Group | 1 212 621 9696 | www.olympiany.com

    Investment Risks

    If the company experiences any or all of the following risk factors, as well as others, thcompanys stock price may be affected.

    Advertisers reduce internet budgets. Advertising is the source of 99% of Googlerevenue. Should advertisers lose faith in the internet as a medium for advertisementGoogle would suffer a significant revenue slowdown.

    A better advertising platform is developed for internet advertising. Search has beethe dominant application on the internet for the last ten years. Should anotheapplication become more acceptable than search, advertisers could move budgetfrom search to that platform.

    Competition is intense and moves quickly. Google faces intense competition fromYahoo! and Microsoft among others. Should a competitor develop a more efficienand relevant search engine, Google would be adversely affected.

    Future growth is predicated on success of mobile. Many of our assumptions o

    growth are based on the future success of all things mobile. Should Googles Androopen source operating system not be adopted by developers and carriers, iteffectiveness would be adversely impacted.

    Loss of key management. A loss of the CEO or co-founders would be viewed as significant loss to the company.

    Sustained weakness in the stock market. Portfolio liquidations and margin calls maforce investors to sell positions in stocks, being a higher priced stock may makGoogle a likely candidate to be a source of funds.

    Conclusion and Valuation

    We are maintaining our Buy rating and a one-year price target of $700. Our estimates havchanged for the remainder of the year as a result of our loss in confidence that the NexuOne will continue to gain sales. Weakness in the stock has presented a buying opportunas broader market concerns have caused shares to drop below $500 in recent trading.

    In keeping with our 25x multiple of 2010 earnings of $28.00, we still achieve a price target $700 per share.

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    Olympia Capital Markets Group Research Google (Nasdaq Global Markets: GOO

    12 May 2010 Olympia Capital Markets Group | 1 212 621 9696 | www.olympiany.com

    Appendix

    Source: Company filings and Olympia Capital Markets Group estimates

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    Olympia Capital Markets Group Research Google (Nasdaq Global Markets: GOO

    12 May 2010 Olympia Capital Markets Group | 1 212 621 9696 | www.olympiany.com

    Google 1Q10 Actual results vs. Estimates

    Source: Company filings and Olympia Capital Markets Group estimates

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    Olympia Capital Markets Group Research Google (Nasdaq Global Markets: GOO

    12 May 2010 Olympia Capital Markets Group | 1 212 621 9696 | www.olympiany.com

    Google, Inc (Nasdaq GM: GOOG)Historical Price Chart

    Source: BigCharts.com

    GOOG 4/14/10 586.77BUY PT: $700

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    Olympia Capital Markets Group Research Google (Nasdaq Global Markets: GOO

    12 May 2010 Olympia Capital Markets Group | 1 212 621 9696 | www.olympiany.com

    Alternative EnergyIndustrialsHomebuildersE-Commerce

    Internet

    Paul J. Resnik, CFA Evan Fox Brian BolanChief Market Strategist Equity Analyst Equity AnalystAlternative Energy Industrials / Homebuilders [email protected] [email protected] [email protected] 212.621.9658 773.413.0285

    Coverage Includes: Coverage Includes: Coverage Includes:Archer Daniels Midland (ADM) Tyco International (TYC) Google (GOOG)Valero Energy Corp. (VLO) Cummins Inc. (CMI) Yahoo (YHOO)

    Pacific Ethanol Inc. (PEIX) Titan International (TWI)Verenium Corp. (VRNM) Standard Pacific Corp. (SPF)Lime Energy Co. (LIME) KB Homes (KBH)Green Plains Renewable Toll Brothers (TOL)Energy (GPRE) Textron (TXT)

    FreightCar America Inc. (RAIL)China Yuchai (CYD)

    Sean Murray Tony CanarozziHead of Trading V.P. Sales [email protected] [email protected] Desk: 212.621.9696 Trade Desk: 212.621.9696Direct: 212.621.9621 Direct: 212.621.9626

    Jeff Girsky Michael Arroyo Chris JacquesManaging Director V.P. Institutional Sales V.P. Institutional Sales

    [email protected] [email protected] [email protected] 212.621.9636 212.621.9652

    Analyst Team

    Trading

    Sales

    Industry Research

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    Olympia Capital Markets Group Research Google (Nasdaq Global Markets: GOO

    12 May 2010 Olympia Capital Markets Group | 1 212 621 9696 | www olympiany com

    Important disclosures:

    Analyst Certification:

    The following analysts hereby certify that their views about the companies and securities discussed in this report are accurately expressed and that thhave not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report: BriBolan.

    As of the date of this report, the analyst has no financial interest in any companies mentioned in this report.

    Ratings:

    Buy: The stocks total return is expected to exceed 15% over the next 6-12 months.

    Neutral: The stock is expected to have a positive return of less than 15% over the next 6-12 months.

    Sell: The stock is expected to have a negative return over the next 6-12 months.

    Olympia Capital Markets Groups distribution of ratings is:

    Buy 63%Neutral 37%Sell 0%

    An investors decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

    Disclosures:

    Olympia Capital Markets Group does not make a market in the shares of any stock mentioned in this report and has not received compensation from expect to receive compensation from any company mentioned in this report.

    This investment report contains information from sources believed to be reliable, but we do not guarantee its accuracy or completeness. Opinions expressare subject to change without notice. This report should not be construed as a request to engage in any transaction. Olympia Capital Markets Group, oraffiliates, may own, take a position, make or market or engage in transactions with respect to the securities mentioned herein. This report is for informatiouse only. Additional information available on request. All rights reserved by Olympia Capital Markets Group.