With Google (NASDAQ:GOOG) expected to announce its Q3 2011 earnings results next week, we expect the company to show robust growth in its core search business, especially in the face of struggling competitors such as Yahoo (NASDAQ:YHOO) and AOL (NYSE:AOL). While the present quarter also saw some major strategic shifts such as the Motorola Mobility (NYSE:MMI) acquisition, they might not make a significant impact on Google’s immediate Q3 results.
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We currently have a price estimate near $600 for Google’s stock, which is roughly 15% above the current market price.
Google’s Search Engine Chugging Along
With both Yahoo and AOL struggling under declining online advertising revenues and leadership tussles, Google’s search business is expected to thrive further. Although Google’s search market share has stayed relatively flat in the U.S.,  – 64.5% in June 2011 64.4% in August 2011 – competitors in the search market do not seem to pose any serious long-term technological threat to Google’s dominant position. It would not be a surprise if Google manages a 30%+ year-on-year advertising revenue growth like it witnessed in the previous quarter.
But Legal Troubles Are Looming
Google’s biggest head-aches in Q3 2011 have been legal issues. The anti-trust hearings against Google have already been initiated by the Federal Trade Commission (FTC).  The coming months should see an intense government scrutiny over Google’s policies and operations, although its too early to say whether the company will come out unscathed from this trial or not.
However, an even bigger worry for Google at present are patent wars. Google’s mobile operating system (OS) – Android – has already seen Microsoft (NASDAQ:MSFT) bag a broad license deal with Samsung,  one of Android’s largest partners. Additionally, Android-based phones face a risk of losing out in European markets as Apple (NASDAQ:AAPL) continues to stifle the the former through patent infringement lawsuits.  What will be interesting to see is whether uses Motorola’s own 17,000+ patents to launch an offensive.Notes: