Schmidt Dumps Google Inc (GOOG) Stock. Is It Still a Buy?

There was a point when Google Inc (NASDAQ:GOOG) was easy to understand. This was when it was simple to just refer to the tech giant as “search giant.” Granted, Google is still the king of search. But those days of measuring the company solely on its search prowess are gone. Google has pushed into smartphones, tablets, operating systems and most recently hardware. This company clearly has ambitions beyond search.

Bears will argue that these goals are scattered. However, just as with its search engine, they also produce results. It’s been three weeks since the company reported its fourth-quarter earnings. Since then, shares have soared almost 15% to reach an all-time high of $786. It’s hard to imagine that the stock may yet seem undervalued.

It seems however, that company insiders may disagree.According to SEC documents filed last Friday, Eric Schmidt, Google Inc (NASDAQ:GOOG)’s executive chairman, who owns 7.2 million shares of the company, plans to sell 3.2 million shares. The company said that Schmidt’s sale is part of a long-term asset diversification strategy. But why now? Should investors interpret this move as an insider “calling the top”? But what exactly did Google’s Q4 results suggest?

With all of the growth comes plenty of angst
There’s never a dull moment with Google Inc (NASDAQ:GOOG). On the one hand, the numbers will startle. But they also introduce plenty of anxiety. For instance, even though gross revenue surged 36% year over year and 2% sequentially, bears argue that the growth seems inflated since some of the revenue is outside of Google’s “core” business. But even if that were a valid argument, when extracting all of the “extras,” Google Inc (NASDAQ:GOOG) still produced 22% growth in net revenue.

Besides, this is despite a 56% drop in Motorola revenue, which missed Street estimates by 25%. And remarkably, revenue surged even with a 6% drop in average cost per click, or CPC, which tracks how much money advertisers pay Google. This was offset, though, by a 24% increase in paid clicks.

Nonetheless, Google Inc (NASDAQ:GOOG) is still the most dominant advertising model in the world. The company is well ahead of Yahoo! Inc. (NASDAQ:YHOO) and Microsoft Corporation (NASDAQ:MSFT)‘s Bing! search engine. And even though Facebook Inc (NASDAQ:FB) has begun to gain meaningful traction, particularly with mobile, Google is strongly positioned to avert near-term threats in the mobile segment. The long term is another story entirely. For now, despite the strong lead that Apple Inc. (NASDAQ:AAPL) and Samsung enjoy in hardware, Google is doing more than just holding its own.

For that matter, Google’s position in mobile devices is arguably more significant today than what it enjoyed in the desktop environment. However, it’s anything but straightforward. That CPC has continued its decline is a major source of angst among investors. And it doesn’t appear to be a quick fix since traffic acquisition costs, or TAC, continue to rise. This is the metric that tracks how much Google Inc (NASDAQ:GOOG) pays to distribution partners.