Topeka Capital Markets‘s Victor Anthony, who last month started coverage of Facebook (FB) with a Buy rating and a $40 price target, today offers up the findings of one Stephen Arnold, a “renowned authority on Internet technologies,” and proprietor of ArnoldIT, whom Anthony asked to opine on the outlook for both Facebook and Google (GOOG).
Anthony writes that� Arnold is upbeat on the prospects for both, stating that “Facebook has a strong opportunity to monetize online search and
sponsored content on mobile,” while Google could win the battle for voice-controlled Internet search and defeat Apple‘s (AAPL) “Siri” natural language assistant.
Facebook stands to do better at selling ads against Internet search happening on a mobile device because the interactions going on with its users make ads more relevant:
Facebook will have a cost advantage because the content is curated by Facebook�s users, obviating the need to employ the technically challenging and costly brute force method of indexing used by Google and other search providers. He believes that a social search offering from Facebook would be additive to the overall search ecosystem rather than take share from Google. Mr. Arnold believes that sponsored content ads (that are highly relevant to location) are the future of mobile advertising rather than text/display related advertising. That form of advertising is in its infancy and whoever figures it out first wins, although Facebook may have the edge.
As for Google, it will win the arms race in speech recognition against Apple, Arnold thinks:
Mr. Arnold stated that Apple�s Siri is employing a tactical approach to voice search (licensing and using wrapper software), whereas Google is investing millions in solving the problem of voice search through a focus on automatic language recognition, on the fly translation, and the integration of speech into predictive search. Voice search is inherently difficult due to accents, outside noises, network latency, and the speed at which strings are received. Google�s approach, according to Mr. Arnold, is rooted in innovation and longer-term thinking and should ultimately prevail.
Anthony doesn’t formally cover Google. His colleague Brian White has a Buy rating on Apple shares and a $1,111 price target.
FB shares today closed up $1.21, or almost 4%, at $33.05, apparently helped by anticipation of a Russell indices re-balancing that will see the stock added. Google shares rose $6.27, or 1.1%, to $571.48. Apple shares rose $4.43, or 0.8%, to $582.10.
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