Google Inc (NASDAQ:GOOGL) Set To Become Economical

In a press release on January 29, Google Inc (NASDAQ:GOOGL) hints at showing more prudence in its expenses in future. Though its fourth-quarter results have not been very promising, the shares saw a rise of 2% last week. The company remained one of the weakest tech stocks last year. However, it has already seen a rise of 8% since the beginning of this year and a gain of 4% has also been observed in Nasdaq Composite Index.

Google pointed out that it would be economical in its expenses in days to come since there was a rise of 49% in its capital expenditure in 2014. Its employee cost had also gone up since the company increased its total number of employees by more than 9,700 (22% rise from the previous year).

Taking cue from the company’s results, one might not be very optimistic about its plans to build its own wireless service. However, at Mobile World Congress last week, Google’s vice-president of products, Sundar Pichai, counters by saying that the company has no plans to enter the market of established carriers but only intends to display few of its innovations to the world. Also, this service can only be availed by the users with Google’s own Nexus phones.

Since this comprises only a small portion of the Android market, the range of this wireless service will be quite limited.

Wall Street’s Investors are not clear whether the company will actually show thrift in its expenses in the future. However, they are welcoming the idea of the effort being made. The stock of Google has been upgraded to “buy” last week by Bank of America Merrill Lynch. Its price target has been lifted by 6% by UBS. Meanwhile Google’s multiple of forward earnings is less than 20 times, which shows a 7% discount to the NASDAQ while it was at 10% premium in the last year. This makes Google a prudent business opportunity.