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Bear Stearns Tapping Blogs For Stock Analysis?

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Aside from maintaining its "outperform" rating on Google, the investment firm thinks a Google Music Store is in the works; a good question for now would be "Did you get this idea from a blog too?"

The business website Forbes reported how Bear Stearns is speculating on the potential of a Google Music Store being developed. Analyst Robert Peck made this observation to clients (emphasis added):

"We believe that Google (nasdaq: GOOG – news – people ) is in the midst of creating its own iTunes competitor, which we’ve dubbed ‘Google Tunes’," the analyst wrote in a client note issued today. "We think this is a logical step, now that the nascent Google Video product has been introduced." "We would expect Google to rollout a Beta service within 3 to 6 months. We note that Google has not confirmed our expectations, and that our thinking is based on Mosaic theory," said Peck. "However, we do think this fits with Google’s recent moves and its ultimate goal of organizing the world’s information."
 

It is an interesting suggestion that Google would enter a market dominated by iTunes; crowded with competition from Microsoft, Yahoo, Napster, and Real; overshadowed by the major music labels persistent requests for more money from online music distributors; and haunted by the twin specters of DRM and the RIAA’s enforcement arm.

Let’s go back to ‘Mosaic theory’ for a moment. A definition of Mosaic theory can be found here; it’s simply a guess made based on available data, and it covers the analyst’s backside if that guess proves to be true. Thus cynical outsiders who think an analyst has inside information are wrong; it’s just Mosaic theory. (If this were a Dave Barry column, he’d probably insert the time-honored phrase, "I am not making this up," here.)

Peck’s note was published by Forbes on January 26th. Speculation about a Google Music Store appeared on Garett Rogers’ blog on January 25th. Based on his sleuthing of http headers, Rogers hypothesized Google may have something tucked away that could eventually host a music player download.

Did Bear Stearns patch Rogers’ work into its Mosaic theory? There may be precedent here. The L.A. Times ran a speculative story in January before the Consumer Electronics Show in Las Vegas. Among the entertaining guesswork it contained was this passage:

Bear Stearns analysts speculated in a research report last month that consumers would soon see something called "Google Cubes" – a small hardware box that could allow users to move songs, videos and other digital files between their computers and TV sets.
 

There was one source for all that Google Cube guesswork before December 2005: a post from irrepressible tech pundit Robert X. Cringely on November 24, 2005:

But the most important reason for Google to distribute its data centers in this way is to work most efficiently with a hardware device the company is thinking of providing to customers….This little box is Google’s interface to every computer, TV, and stereo system in your home, as well as linking to home automation and climate control. The cubes are networked together wirelessly in a mesh network, so only one need be attached to your broadband modem or router.
 

Is your well-compensated stock advisory firm delving the murky rivers of the blogosphere for tasty tidbits to place in its advisory jambalaya? We’re guessing that could happen, and we may be wrong. That’s ok though, we’re just using Mosaic theory here ourselves.

 

Bear Stearns Tapping Blogs For Stock Analysis?
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