| 11:55 am on Dec 4, 2005 (gmt 0)|
Frankly, there should be a law against voting shares.
Your control should be equal to your financial stake in the company.
| 1:14 pm on Dec 4, 2005 (gmt 0)|
|It would be more appropriate, given growth and the sector PE, to use a PE multiple of between 30 and 60 for GOOG (compare ebay, yahoo and others in sector) and keep the 20 for MMM. |
A P/E ratio of 60 in five years? You're comparing the expected growth today and using that factor five years from now. That's like saying Google's going to increase earnings 32% for the next 10 years.
They make money via search. They threw $200 million away on BPL. They are giving away internet access. Get it? More expenses with no revenue stream from those expenses. They are buying companies and giving away their products (Picasa, Urchin). What is their long term revenue stream? With Adsense, they are going to lose a significant amount of their network to Y! and MSN. Wall street doesn't understand this, but we do - because we are that very network.
| 2:39 pm on Dec 4, 2005 (gmt 0)|
Billy, you hit it right on the head my friend ... The big question now is when to short. I say 3-6 months from now.
| 3:58 pm on Dec 4, 2005 (gmt 0)|
|More expenses with no revenue stream from those expenses. They are buying companies and giving away their products (Picasa, Urchin). What is their long term revenue stream? |
G has done a wonderful job of positioning themselves as everyone's friend. "Do no evil"
The G presence has become ubiquitous, and is perceived as "free". In the meantime, the amount of personal information that they gather has only increased with each new "free" release.
The ways that information can be leveraged into cash flow are only limited by one's imagination. Frankly, I find it frightening.
| 4:20 pm on Dec 4, 2005 (gmt 0)|
I have to say I am bullish on google. I don't just look at their earnings in the future for their search advertising content ads. Google has plans to launch a paypal like site called google wallet. They have plans on launching googlespace worldwide, meaning they one day want to have free internet access for the world via satellite, all paid for by advertisers. If they do this, they could make a fortune by producing the network cards for laptops and pcs that enable a computer to connect to their satellites. I truely beleive that within 2 years, every website online will have some connect to google. Free servers may one day not be out of the question, as well as an eventual google OS.
| 4:36 pm on Dec 4, 2005 (gmt 0)|
Google isn't a tech stock.
Google is an Ad agency that presents itself as a tech/search company.
When was the last time anyone in here invested in an Ad agency?
| 7:02 pm on Dec 4, 2005 (gmt 0)|
I belive in following ground action as much as paper.
On the ground Google is making so robust moves. Let me give you an example:
a few weeks back google opened a 20,000 sq. ft office in Bombay (India). Yahoo has had an office there for years. Immediately the Google team was out soliciting business. They approcaed us and gave us hard data on the keywords we required and started traning our people on analytics.
The result: we are giving the $30k biz next two weeks.
Comparitively, Yahoo has never responded to our Overtures ;)
There is definetly a sprit and attitude with Google that wants to create a win-win situation for everybody. This will keep them ahead and successful.
| 7:22 pm on Dec 4, 2005 (gmt 0)|
>> Comparitively, Yahoo has never responded to our Overtures
Hmmmm.no bias or anything ;)?
What if Yahoo and MSN contracted others? You can't tbe the only one in India to do that job
| 10:15 pm on Dec 4, 2005 (gmt 0)|
|Google isn't a tech stock. Google is an Ad agency that presents itself as a tech/search company. When was the last time anyone in here invested in an Ad agency? |
Google isn't an ad agency, but you could call it a media company and not be entirely incorrect. (A rather successful media company, at that.)
| 11:27 pm on Dec 4, 2005 (gmt 0)|
>> When was the last time anyone in here invested in an Ad agency?
when was the last time an "Ad agency" made close to $1 billion in profit and its stock rose a gazillion % in just a few years? Google is highly profitable and the potential is for much more, but at $400 a share investors might have more to lose than to gain.
Walkman Buffet ;)
| 1:23 am on Dec 5, 2005 (gmt 0)|
|They are buying companies and giving away their products (Picasa, Urchin). |
They can probably estimate within 10% what any given website using their free analytics service could earn as an AdSense publisher. It should help them identify publishers to recruit into the program, and help them identify patterns of usage indicative of click fraud.
| 8:19 am on Dec 5, 2005 (gmt 0)|
|Frankly, there should be a law against voting shares. |
Your control should be equal to your financial stake in the company.
So people with more money than sense should rule the company?
| 9:23 am on Dec 5, 2005 (gmt 0)|
|With all due respect to Warren Buffet, he admits that he knows nothing about technology companies. |
Maybe his company would have done better if they
One of the rules I learnt are:
if people start to tell Buffet how to invest it's time to sell
| 3:22 pm on Dec 5, 2005 (gmt 0)|
>>So people with more money than sense should rule the company?
All major decisions are taken by company management and, occasionally, the elected board of directors. Even the occasional shareholder initiative that appears on the proxy statement for a vote is almost always decided by the votes of insiders and institutional investors.
Small shareholders get a voice occasionally when there is a proxy fight, i.e., a group of shareholders tries to elect a different board of directors to change the direction of the company. When it gets to that point, the little guy (and institutional investors with no ties to the company) may have a clearer perspective than management (who usually want to keep their jobs).
| 5:07 pm on Dec 5, 2005 (gmt 0)|
|Sounds like my wife when Macromedia hit $100 and I couldn't get her to sell. |
Well, she sells when I tell her it's time to sell now :)
<off topic> Lol, I guess I'm in trouble then since I don't have a hubby to offer constructive criticism about my finances;-) </off topic>
| 5:17 pm on Dec 5, 2005 (gmt 0)|
|What has Google "innovated" that hasn't already been done by someone else? |
Take a look at scholar.google.com and note the subscript you see: 'Stand on the shoulders of giants.' That statement is a pretty good testament to Google's corporate culture. It's one based on values, principles followed up by the scientific method, and yes, innovation.
Your (and honestly, many others posit this fallacy) black and white characterization of innovation rules out anything at all as a `new'. Nothing exists that in not composed of other things that came before it. There is no one who didn't stand on the shoulders of giants. Thus, innovation can only mean doing maps, but doing them better (and footing the bill to ice the cake). Doing e-mail, but doing it better (and footing the bill on storage). Scanning a document - but not just any document, every document in the world that you can get your hands on (and giving it away when you can). Don't ignore the plethora of research, publication, computer science and engineering that Google uses to attack every problem it sees. Google innovates on old problems, utilizing the state of the art to give it a fresh new bent. That's all that innovation is. I cite the OED:
In 1553:The action of innovating; the introduction of novelties; the alteration of what is established by the introduction of new elements or forms.
In 1596:A change made in the nature or fashion of anything; something newly introduced; a novel practice, method, etc.
In 1861:The formation of a new shoot at the apex of a stem or branch.
A telling usage by Schumpeter in 1939: Innovation is possible without anything we should identify as invention, and invention does not necessarily induce innovation.
Rogers in 1962: It matters little whether or not an innovation has a great degree of advantage over the idea it is replacing. What does matter is whether the individual perceives the relative advantage of the innovation.
I reserve the right to cite this post when I see this fallacy introduced. The fact is, Google has thus far been an innovation machine.
| 6:29 pm on Dec 5, 2005 (gmt 0)|
400 looked to be an achieveable target, And I dont see google earnings slowing down in FY 06, so Even 500 is achievable.
But the long term story is still being written
Yahoo on one side
Billy with his deep pockets
I would imagine google would pay / invest! money to bring open office at par with MS word to reduce the pockets of MSFT.
Google thinks , so does others but the 70:20:10 model and the agility is what will drive the price to 500 in one years time.
But after that, it may be a time to sell. (Mark my words)
Yes now you would not get a 4 fold rise in one year.
About PE ratios as high as 50, I would advise to steer clear of such stocks. Fundamentals should drive a stock. The maximum PE I would permit in my portfolio is 25 is the company is very very exceptional.
Related : The biggest mistake in an otherwise successful career of Bill Gates is not purchasing Altavista / Overture. Had he done so, Yahoo search would have been 3rd instead of MSN.(It is easy to analyse with a hindsight)
At the same time we must thank MSFT for the windows / word / Other day to day simple usage softwares we get. Imagine the change from DOS / Win 3.1?
I also believe that with the launch of increasingly better genuine validation of WIN OS , MSFT will benefit and one should make over 10-15 % in that stock for the nest 1-2 years.
What do you say mates?
| 7:51 pm on Dec 5, 2005 (gmt 0)|
I'm currently holding MSFT and expect 10 - 15% over the next 5 years. And that's a "business as usual" expectation. If they catch a winner (which they might), then we can expect a much higher return.
While Google cannot be compared to the companies in the Dot Com bust (they actually make money), there is a bit of enthusiasm at play when a stock is trading at 90 times earnings. GOOG would be more speculative than value at this point.
| 9:13 pm on Dec 5, 2005 (gmt 0)|
|A P/E ratio of 60 in five years? You're comparing the expected growth today and using that factor five years from now. That's like saying Google's going to increase earnings 32% for the next 10 years. |
Whoops my error. Only 32%/yr for the next 10 years? That's fairly low for Google. I'm expecting earnings could increase as much as 50-100% per year in at least some of the years (on my high end estimate) and 30% would be a disappointment, but still would make investing profitable.
Let's see, just a quick comparison skim from Y!: GOOG, Qtrly Earnings Growth (yoy): 633.30%. Qtrly Revenue Growth (yoy): 95.90% That seems to be rather fast expansion of revenue, which obviously helps profits if margin is maintained. Interesting 7.63B cash vs. Ebay 3B so thay have to room to buy earnings and earnings growth. Forward PE is almost identical at 40 even though trailing is 92 (GOOG) vs 62. I think forward PE would be justified to be much higher than Ebay due to growth (and certainly more than MMM or MSFT). YHOO PE is 53, their growth is slower and their EBITDA earnings are less than Google even though they are more established.
Perhaps 100 PE would be a more accurate figure for GOOG in your calculation.
The biggest medium-term risk I see for GOOG is the copyright issues with the books. Not sure how that will play out so it's one to keep an eye on...
And of course the standard caveat: If there is a thermonuclear war, all bets are off. :)
|if people start to tell Buffet how to invest it's time to sell |
Nov. 7 (Bloomberg) -- Warren Buffett's Berkshire Hathaway Inc. reduced a bet against the U.S. dollar after losing more than $900 million from foreign-currency investments this year.
Hope you didn't follow Buffet into the currency markets.
In case you didn't understand my point: Buffet doesn't invest in tech companies, not because they are bad investments but because he doesn't understand them--one of his key criteria to investing is invest in something you understand. I think I have a fairly good understanding of this space so I'd actually be following his advice.
From his 1998 annual meeting (via motley fool):
"I don't want to play in a game where the other guy has an advantage. I could spend all my time thinking about technology for the next year and still not be the 100th, 1,000th or even the 10,000th smartest guy in the country in analyzing those businesses. In effect, that's a 7- or 8-foot bar that I can't clear. There are people who can, but I can't. The fact that there'll be a lot of money made by somebody doesn't bother me really. There's going to be a lot of money made by somebody in cocoa beans. But I don't know anything about 'em. There are a whole lot of areas I don't know anything about. So more power to 'em."
| 1:49 am on Dec 6, 2005 (gmt 0)|
Let's look at this from a scientific point of view.
GOOG made the biggest break-through in information retreval in 30 years...
...Who is to say that someone else couldn't come along and make a better algo.
No one throught gravity could be explained until Newton; then Einstein came along and gave us a WAY better algo.
People keep forgeting that the algo is the core. If this core gets displayed by something better then Goog is just another AOL w/o all the content.
I think GOOG knows this and is scrambling for content. (ie GoogleBase, Google Print, Google Maps, etc...)
| 3:02 am on Dec 6, 2005 (gmt 0)|
Let's see, Google down $11.85 / share today... Ouch, that's gotta hurt - nearly 3%. Hope you didn't run out and buy GOOG early this morning superpower...
Buffet couldn't understand tech stocks in 1998 because none of them made any money. Why would he be interested in a sector that was unprofitable?
Even I mentioned earlier that Google cannot be compared to the tech. stocks of 1995 - 2002.
| 3:31 am on Dec 6, 2005 (gmt 0)|
>> Ouch, that's gotta hurt - nearly 3%.
the fact that it went down (last week) it's scary. The first ever and that's not a good sign. It's like when Roy Jones got knocked out. Other than that, even at $120 it's a lot of money for the original investors. Sucks for those who joined google this month, but that's life :)
| 11:59 am on Dec 6, 2005 (gmt 0)|
IS GOOGLE Playing the market by ripping off advertisers? Who knows...
But perhaps you can help me. Can someone check their Adwords account today, 6months ago and 6 months before that and if they notice anything fishy. Because I notice for what I am paying today, I use to get 3/4x the impression/clickthroughs.
It seems to me that Google beats anaylsts expectations in every quarter by simply tweaking their bids/system so advertisers pay more for less clicks. What is also interesting is before each quarter ends (reporting quarter, the number of clickthroughs just shoot through the roof). Do Google promote clickfrauds during this time or calculate the clicks different when they approach "reporting" season or something?
Here is a breakdown of my Adwords account.
December 3, 2005
March 3, 2005
December 3, 2004
Does anyone notice as each quarter passes I am paying MORE for less clickthroughs, I wonder if anyone out there can paste some stats like this, it might shed some light and may show why Google is making more and more money each quarter in order to jack up their share prices so all their boards can sell their shares at a high price.
| 12:18 pm on Dec 6, 2005 (gmt 0)|
More bad news for Google.
Time Warner, Microsoft near ad deal: WSJ
"The Journal said that, under negotiations between Time Warner and Microsoft, AOL would drop Google as its main Internet search provider and switch to Microsoft's MSN service. Under their current agreement, Google derived about 11 percent of its first-half revenue from AOL, which also generates substantial revenue from the contract."
It looks like its time to start learning how to SEO MSN Search :)
| 12:43 pm on Dec 6, 2005 (gmt 0)|
|Let's see, Google down $11.85 / share today... Ouch, that's gotta hurt - nearly 3%. Hope you didn't run out and buy GOOG early this morning superpower... |
Could it be that Wall Street has been reading this thread?
| 4:54 pm on Dec 6, 2005 (gmt 0)|
An exit strategy is a way for an investor to cash out of a deal. This could be a VC, business owner, or anyone else in something not as liquid as cash.
The simplest exit strategies in the common stocks are stop-loss and profit-taking.
If you are familiar with stop-loss orders, then it is clear it would protect you from "emotional holding". ("Oh, if I wait a bit more, it just might go back up!"). I usually set stop loss orders, and move it up as the price moves up. When a falling price hits a stop loss order, I only loose the difference between the stop-loss and the cost+fees. IF my stop-loss is already above my cost+fees, I just saved myself a potential headache...
A profit taking uses limit orders, and as you know, limit orders become active when the price going up hits. You can take a percentage of your shares and put a limit order on them, so when they sell it would cover your cost+fees. The remaining unsold stocks are just icing on the cake. This protect you from.. frankly, blind greed.
So going back to my point, exit strategies are things in any investment - from stocks, bonds, businesses, ventures, relationships, food, web sites, advertisements, etc. where you set "mechanical" triggers to get rid of the investment. Sometimes these are never triggered, but they are an "insurance policy".
Exit strategies protect you... from yourself.
| 7:49 pm on Dec 6, 2005 (gmt 0)|
|Let's see, Google down $11.85 / share today... Ouch, that's gotta hurt - nearly 3%. Hope you didn't run out and buy GOOG early this morning superpower |
See my original comment:"it might be pulling back in the next 6 months while we head toward an economic rough patch"
I look at macro-trends not the day-to-day noise. Most of my investments are intended to make 30%+/year over 3 years+. GOOG will be an excellent long term investment but in the next few months who knows...
I think the first part of the year the bears are going to come out in force for the market as a whole. Probably the best performing sectors near-term will be raw materials, mining and energy, which is where I've had most of my portfolio since early this year... hmm.. let's see up 2% yesterday and 3% so far today :)
| 8:19 pm on Dec 6, 2005 (gmt 0)|
Google innovates on old problems, utilizing the state of the art to give it a fresh new bent. That's all that innovation is.[/quote]
I thought maybe the poster meant "innovate" as in doing things in a new way instead of doing the old things in a different way.
| 3:27 am on Dec 7, 2005 (gmt 0)|
|raw materials, mining and energy |
Not sure why your portifolio applies here - you must really hate Benjamin Graham with those plays. Anyway, GOOG down another 1.31.
It will be interesting to see how this all plays out over the next couple of years. Clearly Google is an interesting company to watch.
I liked Google's approach when they specialized in search. Look at how department stores have struggled as they tried to be everythning to everyone. People became fickle and decided they wanted to go to a shoe store for shoes and an appliance store for thier toasters. MSN's a portal, Yahoo's a portal, now Google's turning into a portal. Why would such a leader decide they wanted to follow the others?
| 6:40 am on Dec 7, 2005 (gmt 0)|
|Why would such a leader decide they wanted to follow the others? |
That's a rethorical question.
They only can keep the investors satisfied by reporting higher earnings (due to the high P/E), which can only be done by having more adviews on their OWN content (Search, Groups, Base, etc.). Search is already maxed out. They are market leader and can only loose if Yahoo and MSN get stronger next year. The content network is nice (money from almost nothing) but brings in just a fraction of the profits - too bad they have to share the money. Plus, publishers are not contractually bound to Google. A large percentage of the content network might be gone once YPN and Adcenter go international. You can hear the shouts from the publishers already. They will vote with their feet.
If you are Google, it's much better to have your own content. That's why they are so desperate to get "their own" content and services up - Base, Print, GMail. But that means that they face legal issues (see the copyright issues with writers and publishers) and/or they have to become a portal with its own community generating clicks.
I still think that GOOG are fascinated and surprised by their success on one hand, but they finally realize that this success might be killing the company...
| 12:51 pm on Dec 7, 2005 (gmt 0)|
Googles last index shows they have 4 billion pages indexed.
Their firm is currently worth 120 BILLION. If we were to divide number of pages by their firms worth it woul d show that every page indexed is worth $30?
Maybe this is why they only want quality pages in their index, because they see that each page is worth so much to them?
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