but it appears no one can explain why google will do well down the road. they are a marketing and advertising company that is trying to justify its high stock price by trying out everything under the sun and seeing what sticks.
the reason the stock fell so much last week was due to the govt's request for their data under the ?patriot act? and they said no. that means the govt will now start poking at them with their big stick.
i am happy you are making money of this deal. so i am not jealous. i am just concerned about modern investment strategies that appear, to me, to be speculation at its finest.
There are fundamentals that favor online advertising over offline advertising - I can't get into details but online advertising is about 20X more effective for the $ right now, plus the fact that more and more people spend more time online than offline (esp wrt printed media). There's an entire generation of teenagers who spend more time online than watching TV - think about it.
Whether Google will continue to be able to capitalize on this is still an open question, but it's a defensible argument to be made. They have a huge lead over their competition.
The gvt thingie is going to fizzle. Google is raking in great PR by resisting, and if eventually the courts forces them to release the data, it will apply to all search engines eventually - and people are not going to stop conducting searches on the net.
"The greatest productive force is human selfishness." Robert A. Heinlein
all the other search engines handed over the info like the sheep they are. google was the only one to say no. why?
because our govt will simply give that info to microsoft in a round about way, and so much for google's secrets and value.
i agree with your idea of online advertising and its benefits, but do you really think they will bring in enough revenue to justify its current stock price?
he11 no. so what will they do to bring in billions more? time will tell and I know I am interested to find out what smart people can do with massive amounts of funding.
<< <i>all the other search engines handed over the info like the sheep they are. google was the only one to say no. why? >>
AFAIK, they've only asked GOOG so far.
<< <i>because our govt will simply give that info to microsoft in a round about way, and so much for google's secrets and value. >>
There's no value in search results of the sort. This is not their technology - just stats on past queries. Not to mention that the idea of the gvt passing on trade secrets to MSFT is ludicrous.
<< <i>i agree with your idea of online advertising and its benefits, but do you really think they will bring in enough revenue to justify its current stock price? >>
Yes, possibly - obviously it depends whether they can capture this market. They have plenty of opportunities to fail yet.
<< <i>he11 no. so what will they do to bring in billions more? time will tell and I know I am interested to find out what smart people can do with massive amounts of funding. >>
They just bought an ad platform company specializing in radio ads, which gives you some insight into their strategy - they're going to expand their current model to offline advertising - most likely radio first, then TV.
"The greatest productive force is human selfishness." Robert A. Heinlein
<< My Google prediction: Close to its issue price by the end of the year. >>
What is your reasoning for this? Is it a guess?
----------------
i think the reason he guesses that is because google is good at spending money and poor at bringing it in in relation to how much cash they have right now.
otherwise why would they be trying to start 1000 different adventures hoping one will work out for them.
<< <i>i think the reason he guesses that is because google is good at spending money and poor at bringing it in in relation to how much cash they have right now. >>
Huh? There's an argument to be made that the stock is too pricy, but to say that the company itself is bad at making money is completely false. They make more than $1.5b in revenue per quarter, growing close to 100% a year (obviously, this will no go on forever), and have operating profits of 34% - $530M, all that with no debt and a huge cash position.
So did AOL, apparently. AOL's response was something along the lines of "Here are our already publically-available usage stats. Enjoy." In other words, AOL also told the government to pound sand. At least, that's what I heard/saw on News Hour last night... ----------------------- it appears i was mistaken about AOL... but the others I would have to double check on what they gave to the gubment.
<< <i>My Google prediction: Close to its issue price by the end of the year. >>
What is your reasoning for this? Is it a guess? >>
Irrational exuberance on the part of investors. It seems to be following much the same pattern as many of the dot com stocks in the 90's. Show me the earnings to justify its price. No smoke and mirrors...I want to see earnings. No talk about advertising potential...I want to see earnings.
<< <i>Show me the earnings to justify its price. No smoke and mirrors...I want to see earnings. No talk about advertising potential...I want to see earnings. >>
No company is valued based on it's current earnings. You have to make an estimate of the long term growth, and you have to do this for any company you own. Furthermore, you were very specifc - you said "close to its issue price". That means $80 to $90 a share or a market cap of around $25b. That's a very severe call on a company that currently earns more than $500M a quarter on a revenue base North of $1.5b...
"The greatest productive force is human selfishness." Robert A. Heinlein
What I have seen happen over and over again is that people look at current growth rates and project them WAY out into the future. In the dot-com era, before the crash, stocks were valued "based" on the idea that they'd grow 50% a year for the next 25 years (and become larger than the entire US economy in the process). It was insane in a way that only Mr. Market can be. However, as any student of history knows, Mr. Market also puts the smack down without mercy.
Is Google in la-la land? I dunno, I quit looking at it a while ago. Back when I DID evaluate it I determined that to justify its PE it would eventually have to become as large and profitable as Microsoft. My determination, at the time, is that you don't see more than one Microsoft per paradigm shift. Now i am not saying it isn't a cool company, it is, but I just don't want to make a donation to the traders at this time (Wall Street has enough money already!).
Now, since Google's share price has maybe doubles since I did my analysis I'd go out on a limb and suggest that this pricing is unreasonable. I don't post on this often on /. because it just gets people all defensive. However, I do have a Finance degree and I do know how to do fundamental analysis and for those of you who have bought on emotion and been very lucky so far please do consider if it may be time to take some profits on this stock.
<< <i>Amusing thread, and proof positive how very little people understand the equity markets. >>
Probably about as few who understand the metals markets . I don't claim to understand either. But both have made me money over the past year. That's all I really need to know.
Note - I am *not* claiming that GOOG is a good stock to buy for the long term at this point. As I said in my post, I bought with the idea of holding until February (after they announce). I'm betting that the stock will go up (in fact, I could sell now and make a profit, but I think it will go up more).
However, even if the stock is way overvalued, doesn't mean that it is a bad *company*. Those are completely different things. Sometimes, the stock of a "bad" company has dropped so much that it becomes a great investment. Sometimes, the stock of a great company is priced way too high and is a bad investment - as may be the case for GOOG.
As for the dotcom bust, remember that the companies that went bust did so because they couldn't finance their cash flow. Basically, most of the stocks were for companies that had not broken even yet and never did. This is not at all the case for GOOG. GOOG might be a bad investment, but it is not going bust any time soon - not with $18b in cash and a 34% operating margin on $6b+ of sales a year.
"The greatest productive force is human selfishness." Robert A. Heinlein
<< <i>As for the dotcom bust, remember that the companies that went bust did so because they couldn't finance their cash flow. >>
Also remember that some tech companies didn't go bust in 2000. eBay (EBAY) and Electronic Arts (ERTS) are two examples that I own. Yes, I lost everything in Exodus Communications, but across my entire portfolio I'm up today from March 2000.
<< <i>Is Google in la-la land? I dunno, I quit looking at it a while ago. Back when I DID evaluate it I determined that to justify its PE it would eventually have to become as large and profitable as Microsoft. >>
That's the tack I'm taking with Google -- I think that they will be "the next Microsoft". I like that they have dozens (hundreds?) of ideas, and are kind of just throwing them against the wall and seeing what sticks. Microsoft played very much the same game -- we remember the winners like Windows and Office, but forget all the products Microsoft made that crashed and burned (Microsoft Bob, anyone?). The trick is to make a lot more money on the winners than you lose on the losers. Microsoft has done this famously; I feel that Google will as well. Does that make me a "fool"? Maybe... check back in ten years and let me know.
Again, another very specific price - less than $100. How do you back that up? Did you conduct an NPV of the forecast cash flows, and what growth rate did you assume?
"The greatest productive force is human selfishness." Robert A. Heinlein
That's the tack I'm taking with Google -- I think that they will be "the next Microsoft
GOOG already has 1/2 the market cap of MSFT. I guess you are saying the price could double. I can think of 100 other companies I would rather buy that can double with much less risk, and MSFT is one of them. I hope GOOG does double from here, that would mean the stock market is flying high.
<< <i>GOOG already has 1/2 the market cap of MSFT. I guess you are saying the price could double. >>
Not exactly. I'm saying that GOOG 2006 = MSFT 1986. I don't know what MSFT's market cap was in 1986 (and am too lazy right now to research it), but if you take that multiple to today, that's where I think GOOG will go in the next 20 years. I think...
<< <i>I can think of 100 other companies I would rather buy that can double with much less risk, and MSFT is one of them. >>
Great! Please provide a list of these 100 companies. I'm always looking for a stock that will double. I already own MSFT, so you only need to come up with 99. I'll be here, waiting.
Google is a dot.com waiting to happen IMO. They aren't a market leader in any field not even the search engine anymore but living off it's name. When google get's something like "Windows" that on every desktop thoughout the world with very little options then you might have something. Have a nice ride some haven't learn from the dot.com bust of 2000. Buy companies with assest not just services.
i used to work for Corning before the dot com bust making WDMs. they are poised to sell a buttload of fiber and fiber related accessories. They know glass like no one else I can think of.
I wonder how their main competitor JDS Uniphase is doing?
Remember FOSS is on its way. Fiber to your home is being done right now and Verizon wont have to share it with my company i work for. The laws are set. We CLECs can only rent the legacy infrastructure.
Verizon just bought MCI. The premium ISP here in new england and probably the USA. Imagine, Verizon routinely bought from MCI, instead of using itself which was more expensive.
Fiber optics is dead and has been around since the last 70's. Every fortune 500 company including the 3 I've worked for has gone 100 MB due to cost,maintaince and installation it requires. 1GB Eithernet is out there too. Like most companies that used to have fiber to there servers the band width of a medium is marginal at best with the traffic of a fortune 500 company. When you have 1000's of desktops and servers a switch medium is the way to go and cheap. They may do better at the telcom level but that ship has sailed for quite some time and is over built today.
Fiber to your home is a major over kill with it's bandwidth no compay today has it to their desktop it's a major over kill for the network and it's routers. The average person with a home PC that has DSL, Cable, or a Satallite medium is more than fine at a low cost. It's taken forever to get those product to customers and google doesn't have the rights or the market cap to spead this technology across the U.S. or World and it won't be needed even if they did with todays home computer users.
JMO from a old satallite tech since the mid 80's and a Cisco CCNA holder.
<<Fiber optics is dead and has been around since the last 70's.>>
This is wrong and I really do enjoy a challenge.
<<Every fortune 500 company including the 3 I've worked for has gone 100 MB due to cost,maintaince and installation it requires. 1GB Eithernet is out there too.>>
For the majority of the cases due to the users current needs, this is true.
<<Like most companies that used to have fiber to there servers the band width of a medium is marginal at best with the traffic of a fortune 500 company.>>
Ask Pixar if they have enough bandwidth and processing power yet. But we are still talking about small apples here.
<<When you have 1000's of desktops and servers a switch medium is the way to go and cheap.>>
Oh yes, you are right. Accounting on one switched vlan, marketing on another, with a router as the default gateway for them all with built in firewall, spam filtering, blah blah and an internet connection with VPN blah blah.
<<They may do better at the telcom level but that ship has sailed for quite some time and is over built today.>>
Yes, they do quite awesome at the ILEC (telecom level). Incumbent local exchange carrier. They are the ones with all the assets like wire on poles, fiber in the ground, equipment in every business, and basically a monopoly in their regions. Investors love that word (think microsoft).
Whose equipment do you think you see on the side of the street full of all those copper wires? Well, they are being converted to fiber and I routinely go to the telecom shows and have examined the gear.
<<Fiber to your home is a major over kill>>
hardly. They call it triple play. Internet access, phone lines, and TV over two strands of fiber to each home. Some call it quaddruple play, all the above and movies/music on demand.
but it also scales my friend. those two strands can serve the tallest building in any city with the right gear. That gear is getting oh so affordable now days. The timing is just so perfect as it ramps up 5 years from now.
<<with it's bandwidth no compay today has it to their desktop it's a major over kill for the network and it's routers.>>
you are still thinking small potatoes. currently only people who need it and ISPS/Telcos use it for the backbone, i grant you that. but QOS died a slow death because telcos learned to throw bandwidth at the problem instead of giving every packet a priority. Our voice switch is packetized inside it, but TDM on the outside poised to switch over when businesses will truly trust VOIP.
<<The average person with a home PC that has DSL, Cable, or a Satallite medium is more than fine at a low cost. >>
low cost? ha. cable tv and internet and a phone line from comcast costs more than 100 dollars a month. A lot more I bet. You get a measily filtered bandwidth capped low upload speed connection. You get pathetic service depending on who manages each area. You cannot run your own servers and you are basically paying for an entertainment pipe, not a true internet connection.
<<It's taken forever to get those product to customers and google doesn't have the rights or the market cap to spead this technology across the U.S. or World and it won't be needed even if they did with todays home computer users.>>
hm google. you lost me.
Now verizon just need to buy a few music labels, a few hollywood studios, and bingo that just nailed down that last major hurdle. Content for the peasants to the boob tube.
i will have to reread this for errors and reserve the right to edit it ;-) i hope i made sense in some small way.
Let's see a typical T1 (1.44 Mb) conditioned line was several thousand a month to lease when I got out. Fiber is a medium and nothing more, you have to pay big bucks for bandwidith. The Internet is full of Cat 5 and switched routers who pays for that? The goverment? The broke Telcoms which is laughable since they went broke because they couldn't lease there fiber to big bussiness they had since everyone over built. You think $100 a month is high? Grab your shorts the more the band width the more the cost and Ma Bells not draging that stuff any furter than the trunks, there now having a hard time just getting DSL in every home.
I've terminated a lot of fiber it's a pain and costly to install and if your rough with it it breaks. Is it possiable? Yes if you had the billions to spread it thoughout the internet and the U.S. but most people won't spend $100's a dollars a month to lease a high band width fiber line. If you haven't noticed all these companies are in it for themselves. I guess you think google is buying every cable, telcom, and ISP in America and speand untold billions just to get a working model. A pipe dream and not very realistic. This project would require almost every piece of equipment in America to be upgraded.........
I guess you think a large water main coming into a straw isn't a problem. Goggle couldn't afford to buy the companies much less the cost to upgrade.
<< <i>Google is a dot.com waiting to happen IMO. They aren't a market leader in any field not even the search engine anymore but living off it's name. >>
Since they have a 50%+ of the query market in the US, I'm not sure who else you think has the leadership.
"The greatest productive force is human selfishness." Robert A. Heinlein
<< <i>Google is a dot.com waiting to happen IMO. They aren't a market leader in any field not even the search engine anymore but living off it's name. >>
Since they have a 50%+ of the query market in the US, I'm not sure who else you think has the leadership. >>
The big money is with bussiness not home PC users that once you charge they jump ship. I like free internet mail too but they start to make money off the end user then you see the home PC market move to another search engine. They have a name they were the top dog for years but everyone has caught up. You best buy a Mutual Fund and not put all your eggs in one basket IMO.
<< <i>Not exactly. I'm saying that GOOG 2006 = MSFT 1986. I don't know what MSFT's market cap was in 1986 (and am too lazy right now to research it), but if you take that multiple to today, that's where I think GOOG will go in the next 20 years. >>
Here you go: from http://www.fool.com/foolish8/2000/foolish8001204.htm ... On the day of the firm's IPO in 1986, Microsoft's valuation was on the order of $525 million or so. That's indeed puny compared to the company's market cap today, but it was by no means small by 1986 standards.
Today MSFT is worth approximately 500 times that, about $250 billion USD. For Google to perform similarly going forward it will be 500 x $125 billion or $62 trillion dollars. If we just take it from the IPO price of $85 then about $12 trillion dollars.
I tried to get a back on envelope calculation for gold market cap. I found one source saying there are 153,000 tonnes. I found another source with some numbers and my back of envelope figures is $2.8 trillion USD for all the gold in the world ($550 an ounce). If I am way off, I would appreciate a correction and a source.
One site had the gold ETF, GLD, is worth about $5 billion USD with 9.3 million ounces of gold (290 tons), but I did not see a date with those figures. Those metric tonnes and troy pounds, troy ounces are bedeviling when a person is not used to working in those increments.
<< <i>Today MSFT is worth approximately 500 times that, about $250 billion USD. For Google to perform similarly going forward it will be 500 x $125 billion or $62 trillion dollars. >>
Hmm, $62T. That's a lot of money. I suspect my calculations are a bit off...
<< <i>The big money is with bussiness not home PC users that once you charge they jump ship. I like free internet mail too but they start to make money off the end user then you see the home PC market move to another search engine. They have a name they were the top dog for years but everyone has caught up. You best buy a Mutual Fund and not put all your eggs in one basket IMO. >>
Corporate is a tiny, tiny market so far. In fact, GOOG is also present on the market via their Search appliance.
No one is arguing for anyone to put all their eggs in the GOOG basket. I certainly am not - in fact, I am not even advocating for anyone to invest anything in Google at all.
"The greatest productive force is human selfishness." Robert A. Heinlein
<< <i>The big money is with bussiness not home PC users that once you charge they jump ship. I like free internet mail too but they start to make money off the end user then you see the home PC market move to another search engine. They have a name they were the top dog for years but everyone has caught up. You best buy a Mutual Fund and not put all your eggs in one basket IMO. >>
Corporate is a tiny, tiny market so far. In fact, GOOG is also present on the market via their Search appliance.
No one is arguing for anyone to put all their eggs in the GOOG basket. I certainly am not - in fact, I am not even advocating for anyone to invest anything in Google at all. >>
The whole point being google is free to the end user and that's why it's used the most it was the best when most of the general public came into the desktop/internet market. The ads pay them or if you want to be at the top of thier search you pay more. They are saturated in making money that way. Now they data mine and sell your data to companies and I for one don't like it or the spam it generates and the public is now being made aware of it. Good luck your going to need it.
It's funny your think Corp America is small since they paid for the advancement in computers and the Internet. The only two groups that have the money to move a market is old Uncle Sam or Corp America period. Since when has google been the top fortune 500 company? BTW it takes the group to generate change and investors are looking for the bottom line today not a decade or two for a payout. None of the top companies in Corp America use google or are interested in there long term plans. They are simply trying to survive in the slave labor market of Asia that don't have benfits, unions, or retirement plans that make it hard to compete in a global market.
Do you realize that the WW's in the 20th century that the plants were converted to war time needs? That's something we don't have today it's in China and India. IBM made guns now we would have to order a part from China or another country we outsourced to. The goverment took a leap of faith and I hope it works. Were rapidly loosing all the old skills with the aging labor and it can't be recreated so fast. Were a service ecomony now and MADE IN THE USA simply mean it was assembled here but the parts were imported for the most part.
Now we have WMD's as our defense but it's not WWII anymore and those countries that we've outsouced to have them also. Sleep well.
<< <i>The whole point being google is free to the end user and that's why it's used the most it was the best when most of the general public came into the desktop/internet market. >>
All surveys point out that they are still the best.
<< <i>The ads pay them or if you want to be at the top of thier search you pay more. >>
It's not that simple.
<< <i>They are saturated in making money that way. >>
Certainly not. First, average prices, on a per lead basis, are still 10X or 20X what they are offline. So as more advertisers come online they will bid up the prices paid. Second, the inventory keeps on growing. Right now, Google is an internet search engine but they are deploying the technology in many areas: local search and mapping (competing with the Yellow Pages), etc, etc, etc.
<< <i>Now they data mine and sell your data to companies ... >>
That is not true.
<< <i>...It's funny your think Corp America is small since they paid for the advancement in computers and the Internet. >>
I don't think corp America is small - I think the corporate *search* market is small.
<< <i>...investors are looking for the bottom line today not a decade or two for a payout. >>
This is plain flat wrong. I work in hi tech M&A, and I can tell you that the market is litteraly flooded with VC money trying to find a good long term investment.
<< <i>None of the top companies in Corp America use google or are interested in there long term plans. >>
Tell that to Microsoft and IBM.
<< <i>They are simply trying to survive in the slave labor market of Asia that don't have benfits, unions, or retirement plans that make it hard to compete in a global market. >>
Whatever...
<< <i>Were a service ecomony now and MADE IN THE USA simply mean it was assembled here but the parts were imported for the most part. >>
This is probably largely true, but I don't see the problem personally.
<< <i>Now we have WMD's as our defense but it's not WWII anymore and those countries that we've outsouced to have them also. Sleep well. >>
The US military remains the best military in the world, and that has little to do with the industrial base, and more to do with our military spendings. We just won two wars without using WMDs, I'm not sure you noticed.
"The greatest productive force is human selfishness." Robert A. Heinlein
Great! Please provide a list of these 100 companies. I'm always looking for a stock that will double. I already own MSFT, so you only need to come up with 99. I'll be here, waiting.
No problem. I charge 20% of profits and your account must be at least $2.5 million.
Comments
the road. they are a marketing and advertising company that
is trying to justify its high stock price by trying out everything
under the sun and seeing what sticks.
the reason the stock fell so much last week was due to the
govt's request for their data under the ?patriot act? and they
said no. that means the govt will now start poking at them
with their big stick.
i am happy you are making money of this deal. so i am not
jealous. i am just concerned about modern investment strategies
that appear, to me, to be speculation at its finest.
Whether Google will continue to be able to capitalize on this is still an open question, but it's a defensible argument to be made. They have a huge lead over their competition.
The gvt thingie is going to fizzle. Google is raking in great PR by resisting, and if eventually the courts forces them to release the data, it will apply to all search engines eventually - and people are not going to stop conducting searches on the net.
Robert A. Heinlein
they are. google was the only one to say no. why?
because our govt will simply give that info to microsoft in a round
about way, and so much for google's secrets and value.
i agree with your idea of online advertising and its benefits,
but do you really think they will bring in enough revenue
to justify its current stock price?
he11 no. so what will they do to bring in billions more? time
will tell and I know I am interested to find out what smart people
can do with massive amounts of funding.
<< <i>My Google prediction: Close to its issue price by the end of the year. >>
What is your reasoning for this? Is it a guess?
Robert A. Heinlein
<< <i>all the other search engines handed over the info like the sheep
they are. google was the only one to say no. why? >>
AFAIK, they've only asked GOOG so far.
<< <i>because our govt will simply give that info to microsoft in a round
about way, and so much for google's secrets and value. >>
There's no value in search results of the sort. This is not their technology - just stats on past queries. Not to mention that the idea of the gvt passing on trade secrets to MSFT is ludicrous.
<< <i>i agree with your idea of online advertising and its benefits,
but do you really think they will bring in enough revenue
to justify its current stock price? >>
Yes, possibly - obviously it depends whether they can capture this market. They have plenty of opportunities to fail yet.
<< <i>he11 no. so what will they do to bring in billions more? time
will tell and I know I am interested to find out what smart people
can do with massive amounts of funding. >>
They just bought an ad platform company specializing in radio ads, which gives you some insight into their strategy - they're going to expand their current model to offline advertising - most likely radio first, then TV.
Robert A. Heinlein
What is your reasoning for this? Is it a guess?
----------------
i think the reason he guesses that is because google is good
at spending money and poor at bringing it in in relation to how
much cash they have right now.
otherwise why would they be trying to start 1000 different
adventures hoping one will work out for them.
<< <i>i think the reason he guesses that is because google is good
at spending money and poor at bringing it in in relation to how
much cash they have right now. >>
Huh? There's an argument to be made that the stock is too pricy, but to say that the company itself is bad at making money is completely false. They make more than $1.5b in revenue per quarter, growing close to 100% a year (obviously, this will no go on forever), and have operating profits of 34% - $530M, all that with no debt and a huge cash position.
GOOG financials
<< <i>otherwise why would they be trying to start 1000 different
adventures hoping one will work out for them. >>
It's a new industry - you have to try various things. Obviously, not everything will work.
Robert A. Heinlein
-----------------------
it appears i was mistaken about AOL... but the others I would
have to double check on what they gave to the gubment.
<< <i>
<< <i>My Google prediction: Close to its issue price by the end of the year. >>
What is your reasoning for this? Is it a guess? >>
Irrational exuberance on the part of investors. It seems to be following much the same pattern as many of the dot com stocks in the 90's. Show me the earnings to justify its price. No smoke and mirrors...I want to see earnings.
No talk about advertising potential...I want to see earnings.
might make for interesting reading for those who like it.
Text
Text
dragon: maybe if you used terms like stock market instead of
equity market, more people would understand you. You are "trying"
to be elitist.
<< <i>Show me the earnings to justify its price. No smoke and mirrors...I want to see earnings.
No talk about advertising potential...I want to see earnings. >>
No company is valued based on it's current earnings. You have to make an estimate of the long term growth, and you have to do this for any company you own. Furthermore, you were very specifc - you said "close to its issue price". That means $80 to $90 a share or a market cap of around $25b. That's a very severe call on a company that currently earns more than $500M a quarter on a revenue base North of $1.5b...
Robert A. Heinlein
What I have seen happen over and over again is that people look at current growth rates and project them WAY out into the future. In the dot-com era, before the crash, stocks were valued "based" on the idea that they'd grow 50% a year for the next 25 years (and become larger than the entire US economy in the process). It was insane in a way that only Mr. Market can be. However, as any student of history knows, Mr. Market also puts the smack down without mercy.
Is Google in la-la land? I dunno, I quit looking at it a while ago. Back when I DID evaluate it I determined that to justify its PE it would eventually have to become as large and profitable as Microsoft. My determination, at the time, is that you don't see more than one Microsoft per paradigm shift. Now i am not saying it isn't a cool company, it is, but I just don't want to make a donation to the traders at this time (Wall Street has enough money already!).
Now, since Google's share price has maybe doubles since I did my analysis I'd go out on a limb and suggest that this pricing is unreasonable. I don't post on this often on /. because it just gets people all defensive. However, I do have a Finance degree and I do know how to do fundamental analysis and for those of you who have bought on emotion and been very lucky so far please do consider if it may be time to take some profits on this stock.
i do feel this 1998 all over again.
i will shut up now! nice chatting with you jdelage. you have obviously
studied this more than i!
<< <i>Amusing thread, and proof positive how very little people understand the equity markets.
Probably about as few who understand the metals markets
However, even if the stock is way overvalued, doesn't mean that it is a bad *company*. Those are completely different things. Sometimes, the stock of a "bad" company has dropped so much that it becomes a great investment. Sometimes, the stock of a great company is priced way too high and is a bad investment - as may be the case for GOOG.
As for the dotcom bust, remember that the companies that went bust did so because they couldn't finance their cash flow. Basically, most of the stocks were for companies that had not broken even yet and never did. This is not at all the case for GOOG. GOOG might be a bad investment, but it is not going bust any time soon - not with $18b in cash and a 34% operating margin on $6b+ of sales a year.
Robert A. Heinlein
<< <i>As for the dotcom bust, remember that the companies that went bust did so because they couldn't finance their cash flow. >>
Also remember that some tech companies didn't go bust in 2000. eBay (EBAY) and Electronic Arts (ERTS) are two examples that I own. Yes, I lost everything in Exodus Communications, but across my entire portfolio I'm up today from March 2000.
<< <i>Is Google in la-la land? I dunno, I quit looking at it a while ago. Back when I DID evaluate it I determined that to justify its PE it would eventually have to become as large and profitable as Microsoft. >>
That's the tack I'm taking with Google -- I think that they will be "the next Microsoft". I like that they have dozens (hundreds?) of ideas, and are kind of just throwing them against the wall and seeing what sticks. Microsoft played very much the same game -- we remember the winners like Windows and Office, but forget all the products Microsoft made that crashed and burned (Microsoft Bob, anyone?). The trick is to make a lot more money on the winners than you lose on the losers. Microsoft has done this famously; I feel that Google will as well. Does that make me a "fool"? Maybe... check back in ten years and let me know.
If Google goes on a buying binge with their OP stock.....look out.
The insiders have been unloading as fast as they can.
Robert A. Heinlein
<< <i>google is "worth" less than a $100 per share-if that. Stock market touts should be burned at the stake for pushing this stock over $400.
If Google goes on a buying binge with their OP stock.....look out.
The insiders have been unloading as fast as they can. >>
false, false, false, and false.............anything else??
GOOG already has 1/2 the market cap of MSFT. I guess you are saying the price could double. I can think of 100 other companies I would rather buy that can double with much less risk, and MSFT is one of them. I hope GOOG does double from here, that would mean the stock market is flying high.
Knowledge is the enemy of fear
<< <i>GOOG already has 1/2 the market cap of MSFT. I guess you are saying the price could double. >>
Not exactly. I'm saying that GOOG 2006 = MSFT 1986. I don't know what MSFT's market cap was in 1986 (and am too lazy right now to research it), but if you take that multiple to today, that's where I think GOOG will go in the next 20 years. I think...
<< <i>I can think of 100 other companies I would rather buy that can double with much less risk, and MSFT is one of them. >>
Great! Please provide a list of these 100 companies. I'm always looking for a stock that will double. I already own MSFT, so you only need to come up with 99. I'll be here, waiting.
they are poised to sell a buttload of fiber and fiber related accessories. They know glass like no one else I can think of.
I wonder how their main competitor JDS Uniphase is doing?
Remember FOSS is on its way. Fiber to your home is being done
right now and Verizon wont have to share it with my company i work for. The laws are set. We CLECs can only rent the legacy infrastructure.
Verizon just bought MCI. The premium ISP here in new england
and probably the USA.
Imagine, Verizon routinely bought from MCI, instead of using itself
which was more expensive.
just some thoughts. hm.
Fiber to your home is a major over kill with it's bandwidth no compay today has it to their desktop it's a major over kill for the network and it's routers. The average person with a home PC that has DSL, Cable, or a Satallite medium is more than fine at a low cost. It's taken forever to get those product to customers and google doesn't have the rights or the market cap to spead this technology across the U.S. or World and it won't be needed even if they did with todays home computer users.
JMO from a old satallite tech since the mid 80's and a Cisco CCNA holder.
This is wrong and I really do enjoy a challenge.
<<Every fortune 500 company including the 3 I've worked for has gone 100 MB due to cost,maintaince and installation it requires. 1GB Eithernet is out there too.>>
For the majority of the cases due to the users current needs, this
is true.
<<Like most companies that used to have fiber to there servers the band width of a medium is marginal at best with the traffic of a fortune 500 company.>>
Ask Pixar if they have enough bandwidth and processing power yet.
But we are still talking about small apples here.
<<When you have 1000's of desktops and servers a switch medium is the way to go and cheap.>>
Oh yes, you are right. Accounting on one switched vlan, marketing
on another, with a router as the default gateway for them all with
built in firewall, spam filtering, blah blah and an internet connection
with VPN blah blah.
<<They may do better at the telcom level but that ship has sailed for quite some time and is over built today.>>
Yes, they do quite awesome at the ILEC (telecom level).
Incumbent local exchange carrier. They are the ones with all the assets like wire on poles, fiber in the ground, equipment in every
business, and basically a monopoly in their regions. Investors love
that word (think microsoft).
Whose equipment do you think you see on the side of the street
full of all those copper wires? Well, they are being converted to fiber
and I routinely go to the telecom shows and have examined the gear.
<<Fiber to your home is a major over kill>>
hardly. They call it triple play. Internet access, phone lines, and
TV over two strands of fiber to each home. Some call it quaddruple
play, all the above and movies/music on demand.
but it also scales my friend. those two strands can serve the tallest
building in any city with the right gear. That gear is getting oh so
affordable now days. The timing is just so perfect as it ramps up
5 years from now.
<<with it's bandwidth no compay today has it to their desktop it's a major over kill for the network and it's routers.>>
you are still thinking small potatoes. currently only people who need
it and ISPS/Telcos use it for the backbone, i grant you that. but QOS
died a slow death because telcos learned to throw bandwidth at the
problem instead of giving every packet a priority. Our voice switch
is packetized inside it, but TDM on the outside poised to switch over
when businesses will truly trust VOIP.
<<The average person with a home PC that has DSL, Cable, or a Satallite medium is more than fine at a low cost. >>
low cost? ha. cable tv and internet and a phone line from comcast
costs more than 100 dollars a month. A lot more I bet. You get a
measily filtered bandwidth capped low upload speed connection.
You get pathetic service depending on who manages each area.
You cannot run your own servers and you are basically paying for
an entertainment pipe, not a true internet connection.
<<It's taken forever to get those product to customers and google doesn't have the rights or the market cap to spead this technology across the U.S. or World and it won't be needed even if they did with todays home computer users.>>
hm google. you lost me.
Now verizon just need to buy a few music labels, a few hollywood
studios, and bingo that just nailed down that last major hurdle.
Content for the peasants to the boob tube.
i will have to reread this for errors and reserve the right to edit it ;-)
i hope i made sense in some small way.
``https://ebay.us/m/KxolR5
I've terminated a lot of fiber it's a pain and costly to install and if your rough with it it breaks. Is it possiable? Yes if you had the billions to spread it thoughout the internet and the U.S. but most people won't spend $100's a dollars a month to lease a high band width fiber line. If you haven't noticed all these companies are in it for themselves. I guess you think google is buying every cable, telcom, and ISP in America and speand untold billions just to get a working model. A pipe dream and not very realistic. This project would require almost every piece of equipment in America to be upgraded.........
I guess you think a large water main coming into a straw isn't a problem. Goggle couldn't afford to buy the companies much less the cost to upgrade.
<< <i>Google is a dot.com waiting to happen IMO. They aren't a market leader in any field not even the search engine anymore but living off it's name. >>
Since they have a 50%+ of the query market in the US, I'm not sure who else you think has the leadership.
Robert A. Heinlein
<< <i>
<< <i>Google is a dot.com waiting to happen IMO. They aren't a market leader in any field not even the search engine anymore but living off it's name. >>
Since they have a 50%+ of the query market in the US, I'm not sure who else you think has the leadership. >>
The big money is with bussiness not home PC users that once you charge they jump ship. I like free internet mail too but they start to make money off the end user then you see the home PC market move to another search engine. They have a name they were the top dog for years but everyone has caught up. You best buy a Mutual Fund and not put all your eggs in one basket IMO.
<< <i>Not exactly. I'm saying that GOOG 2006 = MSFT 1986. I don't know what MSFT's market cap was in 1986 (and am too lazy right now to research it), but if you take that multiple to today, that's where I think GOOG will go in the next 20 years. >>
Here you go:
from http://www.fool.com/foolish8/2000/foolish8001204.htm
...
On the day of the firm's IPO in 1986, Microsoft's valuation was on the order of $525 million or so. That's indeed puny compared to the company's market cap today, but it was by no means small by 1986 standards.
Today MSFT is worth approximately 500 times that, about $250 billion USD. For Google to perform similarly going forward it will be 500 x $125 billion or $62 trillion dollars. If we just take it from the IPO price of $85 then about $12 trillion dollars.
The current value of the entire Wilshire 5000 from
http://www.wilshire.com/Indexes/Broad/Wilshire5000/
January 23, 2006 12,744.33 or $12.7 trillion dollars
The Wilshire 5000 is total market value of all 5000 U. S. companies of highest market capitalization.
The numbers speak for themselves.
One site had the gold ETF, GLD, is worth about $5 billion USD with 9.3 million ounces of gold (290 tons), but I did not see a date with those figures. Those metric tonnes and troy pounds, troy ounces are bedeviling when a person is not used to working in those increments.
<< <i>Today MSFT is worth approximately 500 times that, about $250 billion USD. For Google to perform similarly going forward it will be 500 x $125 billion or $62 trillion dollars. >>
Hmm, $62T. That's a lot of money. I suspect my calculations are a bit off...
<< <i>The big money is with bussiness not home PC users that once you charge they jump ship. I like free internet mail too but they start to make money off the end user then you see the home PC market move to another search engine. They have a name they were the top dog for years but everyone has caught up. You best buy a Mutual Fund and not put all your eggs in one basket IMO. >>
Corporate is a tiny, tiny market so far. In fact, GOOG is also present on the market via their Search appliance.
No one is arguing for anyone to put all their eggs in the GOOG basket. I certainly am not - in fact, I am not even advocating for anyone to invest anything in Google at all.
Robert A. Heinlein
<< <i>
<< <i>The big money is with bussiness not home PC users that once you charge they jump ship. I like free internet mail too but they start to make money off the end user then you see the home PC market move to another search engine. They have a name they were the top dog for years but everyone has caught up. You best buy a Mutual Fund and not put all your eggs in one basket IMO. >>
Corporate is a tiny, tiny market so far. In fact, GOOG is also present on the market via their Search appliance.
No one is arguing for anyone to put all their eggs in the GOOG basket. I certainly am not - in fact, I am not even advocating for anyone to invest anything in Google at all. >>
The whole point being google is free to the end user and that's why it's used the most it was the best when most of the general public came into the desktop/internet market. The ads pay them or if you want to be at the top of thier search you pay more. They are saturated in making money that way. Now they data mine and sell your data to companies and I for one don't like it or the spam it generates and the public is now being made aware of it. Good luck your going to need it.
It's funny your think Corp America is small since they paid for the advancement in computers and the Internet. The only two groups that have the money to move a market is old Uncle Sam or Corp America period. Since when has google been the top fortune 500 company? BTW it takes the group to generate change and investors are looking for the bottom line today not a decade or two for a payout. None of the top companies in Corp America use google or are interested in there long term plans. They are simply trying to survive in the slave labor market of Asia that don't have benfits, unions, or retirement plans that make it hard to compete in a global market.
Do you realize that the WW's in the 20th century that the plants were converted to war time needs? That's something we don't have today it's in China and India. IBM made guns now we would have to order a part from China or another country we outsourced to. The goverment took a leap of faith and I hope it works. Were rapidly loosing all the old skills with the aging labor and it can't be recreated so fast. Were a service ecomony now and MADE IN THE USA simply mean it was assembled here but the parts were imported for the most part.
Now we have WMD's as our defense but it's not WWII anymore and those countries that we've outsouced to have them also. Sleep well.
<< <i>The whole point being google is free to the end user and that's why it's used the most it was the best when most of the general public came into the desktop/internet market. >>
All surveys point out that they are still the best.
<< <i>The ads pay them or if you want to be at the top of thier search you pay more. >>
It's not that simple.
<< <i>They are saturated in making money that way. >>
Certainly not. First, average prices, on a per lead basis, are still 10X or 20X what they are offline. So as more advertisers come online they will bid up the prices paid. Second, the inventory keeps on growing. Right now, Google is an internet search engine but they are deploying the technology in many areas: local search and mapping (competing with the Yellow Pages), etc, etc, etc.
<< <i>Now they data mine and sell your data to companies ... >>
That is not true.
<< <i>...It's funny your think Corp America is small since they paid for the advancement in computers and the Internet. >>
I don't think corp America is small - I think the corporate *search* market is small.
<< <i>...investors are looking for the bottom line today not a decade or two for a payout. >>
This is plain flat wrong. I work in hi tech M&A, and I can tell you that the market is litteraly flooded with VC money trying to find a good long term investment.
<< <i>None of the top companies in Corp America use google or are interested in there long term plans. >>
Tell that to Microsoft and IBM.
<< <i>They are simply trying to survive in the slave labor market of Asia that don't have benfits, unions, or retirement plans that make it hard to compete in a global market. >>
Whatever...
<< <i>Were a service ecomony now and MADE IN THE USA simply mean it was assembled here but the parts were imported for the most part. >>
This is probably largely true, but I don't see the problem personally.
<< <i>Now we have WMD's as our defense but it's not WWII anymore and those countries that we've outsouced to have them also. Sleep well. >>
The US military remains the best military in the world, and that has little to do with the industrial base, and more to do with our military spendings. We just won two wars without using WMDs, I'm not sure you noticed.
Robert A. Heinlein
No problem. I charge 20% of profits and your account must be at least $2.5 million.
Knowledge is the enemy of fear
<< <i>No problem. I charge 20% of profits and your account must be at least $2.5 million. >>
Blow me.
Robert A. Heinlein
give it a few years more and the stock will be at 50 dollars.
<< <i>Oops... Google down $71 to $361 (-16%) in after-hours trading due to a earnings report that did not match expectations. >>
...And begs the question, which has the potential to go down to $20, Gold or GOOG?
or is this another way for the big boys to screw over the small fries?
Knowledge is the enemy of fear
GOOG: $484.81
Gold: $648.00
Looks like an ounce of gold beat a share of Google handily...
<< <i>Well, one year later and we have:
GOOG: $484.81
Gold: $648.00
Looks like an ounce of gold beat a share of Google handily... >>
And the forum prognosticators called it.
<< <i>And the forum prognosticators called it. >>
Both turned out to be good investments. Some of the earlier posts were calling for shorting GOOG, or drops of $150 or more.
I own both Gold and GOOG, and I ain't complainin'...
EDIT: 100!