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It just depends if Google turns on some of these revenue streams before or after an IPO. If they do it before to jack up the initial offering price, it might be a bad buy. However, long term, only amazon shows so much promise.
These guys haven't been setting around the plex waxing philosophic about a shopping engine for 3 years. They've got stuff setup and ready to roll that we've not heard of yet. There are more ways for Google to make money this year, than any other major site.
If Google shows no promise over the long term then it simply is not a good investment. Short term is simply to speculative. The IPO will probably be very successful and the price produce PE multiples that will factor in lots of future growth.
From what I am seeing Google seems to have long term prospects. However, this is only a Guestimate. The Frugal will buy Google cautiously with an eye toward long term prospects.
The market usually rewards innovation by applying valuations based on earnings multiples based upon classification i.e. a service based company might fetch a 4x to 5x earnings valuation whereas a true technology company earns many times that in their valuation simply because of the perceived asset and barrier to entry.
Google has all of the tools in place and it would not surprise me AT ALL that the day of the Google IPO that Google will have a greater market capitalization than Yahoo! (please mark this thread for future reference - I want to be the first to predict that).
The value of Yahoo was in their listing sites using human editors based on content. The value of objective hand editing has been eroded by paid inclusion.
Google, on the other hand, uses technology for rankings and includes most any site in the directory (unless they play dirty tricks to increase their visibility).
It would ruin Google's value as an information source to require payment for inclusion in the directory.
You dont IPO INTO a bear ..Forbes is simply testing the interest for capital investors..
You wont see much of any IPO's until after the situation with Iraq is settled.. as far as that goes you wont see any sustained growth in the Markets at all until then IMO
one and only one thing matters ..PROFIT..THats all investors care about anymore (as it should be) they are incredibiliy more savy than they were 5 years ago..
They dont care about who Goolge is doing business with , what great new products are in the works etc..
They understand those great new "partnerships" those great new services and products go in the EXPENSE column ...and it's a wait and see if the promised revenues actually arrive and if Google will actually know how to make a PROFIT out of those revenues..
Google hype wont cut it out in the world of open 10Ks
Watch for Froogle to be monetized earlier than you think. Watch for premium news.google. Watch for Adwords to become more popular after the Overture/Google suit plays out. Watch for premium listing rates to be increased to what the market will bear. Wacth for more licensing of their pure database and more MYWAy type deals. And watch for more revenue generators than we can ever think of now.
As an outside bet, look for a premium search service of their main database with as possibilities email alerts, saved queries, a personal search portal etc etc. High quality and priced accordingly (maybe at two levels) for professional researchers and those who take search seriously, plus mainstream jo blow searchers.
Google's main competitors lie in Fast, Teoma, and owners of other relatively "pure" braodboased search engine databases (including maybe Y!/Inktomi if Y! performs an incredibly unlikely turnaround in the way I expect they will integrate Inktomi in their services - Ink pure is looking better and better.. I doubt Yinktomi will be as pure)
If i had the money, I would be there in a twinkle of the eye. It's all in the brand.
While we agree on that point, we may differ on HOW google is best placed to acheive it.
My view is it cannot do this without maintaining and extending the value of it's free "pure" index. That brings the eyeballs. The advertising and licensing brings in the income as a result. Google is not a direct sales site.
Take that away and its market and brand advantage is lost and they merely become an equal competitor with many other search services. That would be the quickest way to make sure Google does not perform and im not willing to assume that public investors at large will not realise that.
That would mean a complete rebranding and strategy, starting from stage 1, and competing in a crowded established market place. Google has neither the experience nor skills to do that, at least at present. It's predominance was simply because of a service quality far exceeding established competitors and a grass roots understanding of how the Web works and Web browsers think.
That's not to say it wont happen, but its extremely unlikely to happen and their hard earned brand equity will disappear overnight.
I have more faith in the intelligence and longer term view of the 2003 investor compared to the opportnists of previous years. We are now in a more austere era and that will continue throughout most of this decade at least. Substance counts, spin works less, patience wins.
Borrowing from the fave phrase of others here that I see frequently..
This may well be the era of the grasshopper...
All i have seen from others on here is Google hype and that does not cut it in the world of SEC reporting.Forget about the VC guys who ponied up for Google,that was a lifetime ago in terms of the market and anyone with an idea could get VC capital.
Google went cap in hand to get the original seach deal with Yahoo and in return for $7m in revenue gave away 10% of the company.Who knows what the AOL deal cost them in terms of revenue sharing etc to oust OVER.
No denying Google is an excellent search product but sadly for Google whilst it is popular there are many others who are as equally good now as the field has certainly caught them up.The likes of Fast,Teoma and Wisenut all offer excellent search results and Google is trying to morph into the 4th portal.
None of the other major portals AOL,Yahoo or MSN have even looked like making a profit,Google not only faces history but a very wary investor and very strong and established competitors.
For Google to even contemplate an IPO suggests they cannot make money in their current form.
Just guessing how much impovement could be possilbe in the next three years...
- They have 50% of the search market on which their own adds appear.
+ could that max to 75%?
- How much more will the average cpc rise?
- How much more will actual cpc advertising at Google grow?
- How much growth will there occur in SE searches per average internet user?
- How many new internet users?
Google: $100 profits times PE 30? = market value 3 billion..
That`s a too high PE Vitaplease
I thought so as well [webmasterworld.com] Tor.
But I guess we are still in the crazy America's here, if you compare what PE value they are giving E-bay.
Certainly given the potential growth as guessed above, they should go above 20?
To those that say " I met the nice folks at google and they are not greedy"... its not up to them to be or not.. they have to be! A public company looses control.. its the stock holders who own them and they say we want to see lots of money, lots of profit.. the google employees say "WE MUST PERFORM" They have no choice.. its not up to them anymore.. trust me... been their, lived it, seen it, breathed it.
Exactly - the stock market takes the humanity from business ownership, and turns everyone in a company, from the CEO down, into a servant of an ANONYMOUS lord. It's the new slavery. It's the worst when a company like Google goes public, because I think they DO care. It will only be downhill.
And despite the extra funding, I think most companies would be better off private in the long run. The pride and work ethic of a private company in good hands leads to more innovation and long term profits. Anonymous stockholders/masters only care about short term (1-5 year) profits. The welfare of the employees is important only in as much as how it will effect the delivery of profit, and employees WILL notice the change. It is disgusting. Do the owners of a company like Google really care so little about their creation, or are they just foolishly following the bandwagon?
Kleiner Perkins and Sequoia have a history of IPO's under their belts and combined have built some of the largest companies (Amazon, AOL, Netscape, Intuit, Genentech, Compaq, Sun, Juniper, Apple, Cisco, Yahoo etc). I highly doubt that they for even 1 minute would consider an MBO as part of the exit strategy for their capital. The only acceptable way to earn back the money that they invested on behalf of their limited partners in the funds that invested is through an IPO or to be aquired by a company with whose stock they can easily liquidate (i.e. public stock).
It will happen whether the founders want to or not, it may not even occur this year, personally I think it will and will lead to a resurgence in the marketplace and will hopefully restore consumer confidence in the markets.
I had an idea that Google should set aside 1% or 2% of the float for small investors, and issue them based on some form of points system kind of like Air Miles. A webmaster can apply for a ID, and for every adwords dollar spent, they get so many points which can be redeemed for google merchandise, or even the right to buy google stock. Even without an IPO, this idea makes sense IMHO.
If not this, then run a lottery. Allow us small investors to own part of something we beleive in, and do not cave to corporate america's greed. If done properly, an IPO can be a positive thing. If anyone can make an IPO work, it should be Google.
Plus, I certainly think a lot less of us will be griping, if we make some money from the IPO. :-)
Any one agree, or am I suffering from Google Dance euphoria (nowhere to #3)
Spagmoid and others who say Google is doing this for greed and will lose focus and shouldn't go public - You just aren't getting it.
My words were exact, read them again before you tell my I don't get it. I didn't say google was doing it out of greed. I said stockholders are greedy, and no matter what google's intentions are now, the will of the stockholders will eventually pervade the company.
Just a couple of questions that are important to determine the IPO motive:
1) How much of Google's stock is owned by the VCs?
2) How much stock will be floated?
It's important to know these things, because if the VCs are the only ones dumping their stock, the landscape will not change much at Google, with the VCs being swapped out for Joe public. Big deal. Joe public has less of a voice than a VC.
The other thing that's worth noting, and was mentioned earlier in the thread is that the US is in the middle of a bear market. Why float now? Well, in Google's case there's only one good reason: to determine the value of Google stock. To make it into a currency that they can use for both internal (stock options) and external (acquisitions)reasons. They would certainly be crazy to exit now.
Worse times may be ahead for technology stocks in the short term, but there will be a recovery, and I'm sure it will be worth waiting for.
By the way, my guess on an opening day p/e is 50. I have faith in this growth stock :)
if you're really interested contact your broker and ask if they can reserve some Google shares at the IPO for you as well, I bet they'll have some allocated for their own customers as most brokers do this kind of primary market ;)
your broker might already be a venture capitalist in google....who knows.
also, sometimes the broker won't make this public! write them an email or call - ask about the Google IPO and if they're being a part of it. if they say yes, ask if customers can buy in smaller quantities from the brokers allocation. you never know, you might get a yes for an answer and make a good buy ;)
<Do the owners of a company like Google really care so little about their creation, or are they just foolishly following the bandwagon?>
What I am referring to is that it is not Google's will but the VC's which at the current moment would be the same as a public market because they no longer have control so what is the difference.
Sly Old Dog, If your P/E prediction is correct then I could be right in my prediction that Google will have a higher market cap than Yahoo!.
I'm not sure of the current cap table for Google or what they might possibly float to the public markets, if anyone has heard of which investment banker is underwriting the offering that would help although at this point I imagine that it is still speculative and a rumour. Kleiner Perkins has good relationship with Goldman Saks so if there were to be an offering I'm sure they would lead.
Regulators are likely to scrutinize any move Microsoft makes, since they have already had a slap on the wrist.