Berkeley CSUA MOTD:2007:October:02 Tuesday <Monday, Wednesday>
Berkeley CSUA MOTD
2007/10/2 [Science/Battery, Science/GlobalWarming] UID:48218 Activity:very high 75%like:48221
10/1    Finally!  OLED Televisions
        \_ Technology needs more development still.  But I'm glad this is
           finally rolling out.
        \_ 3mm thick?  Does it break easily just from moving around?  (Unless
           it's made of flexible material.)
2007/10/2-5 [Computer/Companies/Google] UID:48219 Activity:very high
10/1    Where's the short Google at 100 guy?
        \_ Me thinks it's a great time to short now.
           \_ Yeah, definitely short it now!  Funny thing about stock
              valuation:  it can sometimes be rational and sometimes
              be irrational.  If everyone hates a stock, and everyone
              shorts it except for a few, and no one who actually owns
              the stock sells it, it'll go up, not down.
              \_ Over time, companies which succeed will go up and
                 companies which fail will go down.  The question for
                 Short Google Guy was always, what reason was there to
                 short Google, other than his own interpretation of
                 the current stock value, which was not based on any
                 sort of analysis?
                 Google was a freight train back then, and it still is.
                 As long as the company keeps executing, don't get in the
                 way of a freight train.
                  -tom  (Finally bought GOOG at 450)
                  \_ 450? You're an idiot.              !short G guy
                 \_ Why? Because GOOG's market cap is 5x that of YHOO
                    and there is no reason for it. I still think that most
                    investors do not understand what they are investing
                    in. They are buying a name/brand. Brands do have
                    value, but so what? I would say that GOOG should be
                    valued about 2x YHOO based on performance, but 5x is
                    not justified. I still think that GOOG is using money
                    to buy talent and hoping that that talent figures out
                    some great product(s). That might work. It's not what I
                    want to invest in. The stock is overvalued. BTW, it
                    was Motley Fool's "Worst Stock for 2007" so I am
                    hardly the only person who doesn't understand why so
                    many people want to suck the c*ck of this dog.
                    \_ Hey, welcome back, Short Google At 100 Guy!  Good to
                       see that being brutalized in the market for three
                       years hasn't taken away your sense of certitude.
                       Perhaps the fact that GOOG is making *more than 5
                       times as much money as YHOO* might have something to
                       do with the fact that the stock is valued 5 times
                       YHOO 6/07: $1.7B rev, $185M earn
                       GOOG 6/07: $3.8B rev, $1.1B earn
                       But go ahead, keep shorting!  I'm sure Yahoo will
                       be destroying Google any day now!  -tom
                       \_ Yahoo is VERY diversified. Google has ONE product.
                          You know what they say, easy come, easy go.
                       \_ Oh, humor of tom mocking someone for certitude in
                          the face of stunning evidence to the contrary.
                          In our next episode, tom will declare that any who
                          mock or disagree with him are idiots.
                          \_ Are you Short Google At 100 Guy, or is there
                             someone else as stupid as you are?  -tom
                             \_ Dear god you're fun to bait.  And no, I'm not
                                Short Google Guy, I pretty much always sign my
                                posts. -dans
                        \_ The P/E for both is about the same. Why do you
                           think GOOG deserves a 5x market cap?
                           \_ Uh, because it's earning 5 times as much.
                              Do you understand what P/E means?  -tom
                           \_ Uh, how about because it's earning 5 times
                              as much money?  Do you have any idea what
                              P/E means?  -tom
                              \_ Yes. Do you? Two companies with one share
                                 of stock outstanding. One company's stock
                                 is $20/share. The other is $10/share. The
                                 first company earns $10. The second
                                 company earns $5. What is their P/E? What
                                 is their market cap? How was that $20
                                 determined in the first place and what
                                 does it mean to an investor? BTW, as of
                                 today GOOG has the 13th largest market
                                 cap in the US. If GOOG tripled in value
                                 it would become the largest company in
                                 the US. Do you think it will triple again
                                 (let alone a 600% increase)? Some day it
                                 might, but as compared to previous growth
                                 in stock price over the last N years?
                                 Any reasonable expectation of growth in
                                 earnings is already built-in to the current
                                 stock price so where does that leave
                                 someone who buys at $650?
                                 \_ Price/Market Cap: $20, $10. P/E: $2 for
                                 \_ Price/Market Cap: $20, $10. P/E: 2.0 for
                                    both.  All else being equal, the companies
                                    are valued comparable relative to
                                    are valued comparably relative to
                                    earnings, just like GOOG and YHOO when
                                    GOOG's market cap and earnings are both
                                    5* YHOO's.  Do you have a point?
                                    \_ Now answer the question about how
                                       the $20 was determined in the first
                                       place and what it means to an investor.
                                       \_ To me, being an investor means
                                          finding good companies which I
                                          can purchase at a reasonable
                                          price given their performance and
                                          prospects.  As long as Google
                                          continues to execute on its web
                                          services, it fits that mold.  I
                                          don't see any serious threats to
                                          Google in the areas it dominates.
                                            \_ Google only has 1 web service.
                                               Without ads from search they
                                               cease to exist.  What are these
                                               other 'web services' you speak
                                               of?  How much research have you
                                               done into search competitors?
                                               Not Yahoo or MS crap who are
                                               just playing follow the leader
                                               but people working on real
                                               changes in search?
                                               \_ Wrong.
                                    "Google would be the largest company
                                    in the US" assumes that none of the
                                    other companies are getting larger.
                                    My investment goal is generally to look
                                    for a double within 5 years; I think
                                    GOOG is reasonably likely to hit that
                                    mark for me; at a forward PE of 25 (less
                                    than today), it would require hitting
                                    earnings of about $7 billion before 2013.
                                    Considering that GOOG is likely to hit
                                    $5 billion this year, that does not seem
                                    unreasonable.  -tom
                                    \_ Why should GOOG have a larger
                                       market cap than BRK-A making $7B
                                       when BRK-A makes $12B+? Also, if
                                       share price doubles, but earnings
                                       only increase 50% ($5B to $7B) then
                                       GOOG P/E would skyrocket. I don't
                                       think it's gonna happen.
                                       \_ If you don't think earnings
                                          increases are going to happen,
                                          you're correct in not buying
                                          GOOG.  Do you have a reason to
                                          believe earnings increases will
                                          not continue to happen?  Earnings
                                          for the last 3 years for GOOG:
                                          $400M, $1.5B, $3.1B.  Projected
                                          for this year: $5B.  Do you think
                                          it will stop there?  Why?  Do you
                                          think BRKA is growing at that rate?
                                          Do you think a company that is
                                          growing quickly should be valued
                                          the same as a company that's growing
                                          slowly?  -tom
                                          \_ How long do you think a company can
                                             grow quickly?
                                             \_ Depends on the industry and
                                                the economy, eh?  Google
                                                won't continue to double
                                                profits and revenues every
                                                year, but it is likely to
                                                grow faster than BRKA for
                                                at least the next 5 years,
                                                absent a serious technological
                                                challenge (which I don't see
                                                on the horizion).  -tom
                \_ Market Cap != Company Value.  Some companies capitalize
                   their operations largely through debt.  How much equity
                   vs. how much debt is a highly idiosyncratic decision.  So
                   who has the most equity value is an irrelevant question.
                        \_Google is something like 40th biggest company
                          in America / 160th in the world.  Almost all of
                          its value goes to equity holders.  Citibank goes
                          almost all to debt, but it is worth 12.5 Googles.
                   \_ What happens if you buy all outstanding GOOG stock?
                        \_ You would own all the equity, which will receive
                           whatever value the company has AFTER the debt
                           is satisfied.  The first portion of company's value
                           goes to the debtholders.  Berkshire, since it is
                           in this example has about the same $180B market
                           cap as Google, true, but also has $140B of debt
                           and is worth $320B.  If you wanted to have the
                           right to every cashflow Berkshire were to ever
                           take in in the future, you would have to pay
                           $320B.  For Google, $180B. (~0 debt)
                           \_ You could buy BRK for ~$180B and assume the
                              debt. The net income is income *after*
                              interest on debt has been paid and it is 2x
                              that of GOOG and it can be had for ~$180B.
        \_ The problems investing in google: 1) they have a single product,
           2) that single product can be displaced by a superior product at
           any time (google wasn't always the #1 search engine), 3) they are
           super secretive about everything (which bugs me as a potential
           investor), 4) they're flying on a lot of hype, if/when that balloon
           bursts, they'll come crashing down fast.  I am not short-google guy.
           I know better than to bet against the crazed massses.  I also won't
           put my money into a single product company built on net hype.
           \_ I agree with this guy.  Psychologically propped up stocks can
              suffer a bubble bust any time, based on news you cannot
              predict.  You can win, but it's more about luck than anything.
           \_ Was it Warren Buffett who once remarked that he doesn't invest
              in high tech companies because he does not understand valuation
              for such companies? -- ilyas
           \_ Google's product is not search.
<<<<<<< Other Changes Below
              \_ Google's product is ads slapped on search results pages.  If
                 someone makes a better search, then google's ad value drops
                 to near zero.
                 \_ Wrong.
              \_ Of course it is. They say it is not, because they don't
                 want to be painted with that brush and they are trying
                 like mad to diversify. However, if the Google search
                 engine disappeared tomorrow (along with YouTube) then what
                 would they have left?
                 \_ no, their product is advertising.  Search is just
                    'advertising' to bring in the eyeballs and make their
                    real product worth something.  Do you think TV shows are
                    the 'product' of broadcast TV companies?  Think about
                    where they get their revenue. -ERic
                    \_ Without search they would have no viewers and hence
                       no advertisers. Their product is their search
                       engine. Likewise, TV shows are the product of
                       broadcast TV networks. You are confusing the
                       product with where the revenues come from. GOOG's
                       problem going forward is finding ways to expand
                       their market share and that will be difficult
                       because they already have such a popular search
                       \_ Google has been desperately trying to diversify for
                          about 5 years.  They have come up with all sorts of
                          very cool and free products but they're not making
                          any real money on any of them.  They also got a bit
                          Microsoft-y, buying up all sorts of little companies
                          who could do things that Google with all their PhD
                          geniuses on board could not.
                       \_ Wrong.
           \_ Google is not "psychologically propped up."  It is a company
              that is making money hand over fist, growing at an astounding
              rate, and showing no signs at all of giving up its dominating
              market position.
              \_ Like so many others before it, especially in high technology,
                 they too shall fall.
                 \_ yeah, I'm sure those idiots who bought Microsoft and Cisco
                    are kicking themselves now.  -tom
                    \_ The idiots who bought in 2000 sure are.
                       \_ Google in 2007 is not comparable to Microsoft/Cisco
                          in 2000; it's comparable to Microsoft in, say, 1990,
                          or Cisco in 1995.  People who bought those stocks
                          then made a lot of money.  I think Google is more
                          like Cisco than it is like   -tom
                          \_ Delusional. Like I said, good luck.
              Much of the dotcom bubble was based on companies with no real
              earnings and no prospects.  Google is not one of those companies.
              It will have over $15 billion in revenues this year and probably
              $5 billion in earnings.
              $5 billion in earnings with growth rates remaining near 50%
              year-over-year.  That's not hype, that's a company with
              ridiculously strong, probably unmatched financials.  Bet
              against it if you like, but you're likely to get your head
              handed to you, just like short-GOOG-at-100-guy did.  -tom
>>>>>>> Your Changes Above
              \_ There are 34 other companies with sales over $10B and 5 year
                 growth in line with GOOG. GOOG has a larger market cap
                 than all of them except for BHP.
                 \_ Are you shorting them?  Give some examples; I'd be
                    interested to investigate them.  -tom
                    \_ No one has to short something to correctly note it is
                       overvalued and highly risky.  Your obsession with the
                       one short guy is a red herring which has nothing to do
                       with the overhyped valuation the crazies in the market
                       have placed on this secretive single-product company.
                       \_ If you're not putting your money where your mouth is
                          why should we possibly be interested in your risk
                          assessments? -dans
                          \_ Because as I said earlier, I'm not going to
                             put money down against crazy people who have a
                             whole lot more they can afford to lose than I can.
                             I don't have to play russian roulette to know
                             that it is stupid to do so.
                             \_ But by your very statement you indicate that
                               the people putting money down on google are
                               neither crazy nor playing russian roulette.
                               Ergo, why is your risk assessment of interest
                               to anyone, but, well, you? -dans
                               \_ No, you're confused.  By my very statement
                                  they are playing russian roulette and simply
                                  haven't found the chamber with the bullet
                                  yet.  I'm not tom.  Why are you trolling me
                                  like I'm tom?  As far as why would anyone be
                                  interested?  It's the motd.  The very
                                  question has no meaning here.  If people
                                  find my risk assessment interesting, they'll
                                  reply.  Some have.  You have.  If not, they
                                  will skip it.  Doesn't matter either way.
                       \_ No one has provided any real analysis to suggest
                          that Google is overvalued.  They've provided
                          irrelevant comparisons to other companies,
                          and thrown numbers around in ways that suggest
                          that they really don't know how to analyze a
                          company's stock valuation.  For that matter, I'll
                          take a company with a good single product over a
                          company with a confused product strategy (such as
                          Yahoo) any day.  -tom
                          Yahoo) any day.
                          Edit to add: You also haven't provide examples of
                          companies with market cap over $10B and growth
                          profiles similar to Google.  -tom
                          \_ Look them up yourself. It's easy enough. A
                             lot of them are energy companies. I think
                             that Apple is one of them, too, as is
                             \_ I also own Apple, and Berkshire Hathaway for
                                that matter.  Oil companies are not
                                comparable; they are growing due to the
                                commodity they control, which at some
                                point is going to fall off a cliff.  -tom
                                \_ That's only better for them in terms of
                                   profit. Or if you mean that some day
                                   there will be zero need for oil then
                                   your horizon is far too long and who
                                   knows what will happen with GOOG in 100
                                   \_ Oil companies are basically commodities
                                      plays, and commodities plays are not
                                      directly comparable with pure stock
                                      plays.  It may be that oil companies
                                      are good investments due to the
                                      commodity scarcity, but that doesn't
                                      really relate to much other than the
                                      price of the commodity.  It also
                                      leaves aside the moral issues.  -tom
                                      \_ What moral issues?  You invested in
                                         google who has some serious moral
                                         issues but that didn't seem to
                                         bother you; I don't get how you can
                                         seem to believe oil companies have
                                         moral issues which appears to be a
                                         minus for you yet google who has
                                         moral issues is a plus for you.
        \_ I just wanted to make a meta comment.  I don't actually know how
           I would value google's stock.  However, to people who thought that
           google was overvalued before, and got schooled by the market, you
           can't just reply that 'the market is full of idiots, the stock got
           hyped' and so on.  If the market schools you, your model is bad, end
           of story.  Maybe your model needs to accomodate psychology. -- ilyas
2007/10/2-5 [Science/Electric] UID:48220 Activity:nil
10/2    Now *THAT's* a model rocket
2007/10/2-5 [Science/Battery, Science/GlobalWarming] UID:48221 Activity:low 75%like:48218
10/1    Finally!  OLED Televisions
        \_ Technology needs more development still.  But I'm glad this is
           finally rolling out.
        \_ 3mm thick?  Does it break easily just from moving around?  (Unless
           it's made of flexible material.)
        \_ I don't get it.  What use does a home user/consumer have for this?
           \_ While this particular model isn't remarkable, OLED has a lot of
              potential for televisions in general.  Compared to LCD, OLED sets
              should have wider viewing angles, response times two or three
              orders of magnitude quicker (so fast action on screen won't get
              blurry), and better display of the color black (all colors,
              really, but black is particularly bad on LCDs).  Early adoption
              aside, the way OLEDs are manufactured means they should also be
              cheaper to manufacture (once the production issues get sorted
              out, yields come up, and economies of scale kick in).
              \_ Thanks.  I wasn't seeing how super-thin was that big a deal
                 but the color, speed, etc, makes sense.  I get it now.
2007/10/2-5 [Uncategorized] UID:48222 Activity:moderate
10/2    tom are you actually holding G stock? If so, I wish you the
        best of luck. Tee hee hee.              -short G @ 600 guy
        \_ Yes, I have GOOG.  Up 30% in 6 months so far.  Forward PE 30
           based on conservative assumptions.  -tom
        \_ Yes, since about March.  Up 30% so far.  Forward P/E 30.  I don't
           need luck.  -tom
           \_ People don't learn from the dot-bomb days.
              \_ Yeah, especially people who hold AMZN, +180%.
                 Not everything bombs.  -tom
                 \_ Just most of it.  Why did you wait to buy until March when
                    you've been hawking it here for much longer, IIRC?  If you
                    had bought at $83 you could have quit your job.
                    \_ It didn't fit my risk profile until more recently.  I
                       hadn't been hawking it, I'd just been pointing out
                       [correctly] that it was stupid to short it.  -tom
                       \_ And now that it's even more expensive it does
                          fit your risk profile?
                          \_ No, now that it has several more years of
                             data to examine and compare.  -tom
2007/10/2-3 [Politics/Domestic/Crime] UID:48223 Activity:nil
10/2    Back to OJ Simpson: anyone want to explain how you can get away with
        killing 2 people but get 30 years on burglary? Is there
        something wrong with our justice system?
        \_ 1) Can't.  2) Yes.
2007/10/2-5 [Politics/Foreign/MiddleEast/Iraq, Reference/History/WW2] UID:48224 Activity:moderate
10/2    Check this out, it's awesome:
        Ratio of wounded in action to killed in action:
        WW2: 1 killed to 2.40 wounded
        Vietnam: 1 to 3.12
        Current: 1 to 8.3
        \_ All Hail Western Medical Science!  Amen!
           \_ If you stick a tube in a vegetable, it'll be alive
              indefinitely. Case in point... the veggy woman case.
        \_ A lot more soldiers get wounded than before?  "Ouch, I just got
           poked by that cactus and my pinky is bleeding.  I'm out of the
           \_ No, it is really because doctors can patch up and save the lives
              of soldiers with all sorts of gruesome wounds that would have
              been certain death in Vietnam or WW2.  Same thing for Vietnam
              vs. WW2.  If you go back to the Civil War, things we consider
              a scratch or minor wound would be almost certain death.
              \_ Advances in medicine certainly helped a lot, but it's not the
                 only thing going on.  For one thing, the ammunition size
                 has decreased over the years (we used to use 7.62 rounds in
                 our assault rifles).  The decrease was driven by limits on
                 soldier carrying capacity (as soldiers were called upon to
                 carry more and more equipment), by the fact that the
                 crucial thing is to disable, not kill, and by noting that
                 most engagements were fought at distances where larger
                 rounds were not necessary to achieve decent ballistics.
                   -- ilyas
                 \_ Uhm... ok *our* rounds are smaller but doesn't it really
                    matter what the *other* guys are using?  I suspect your
                    typical AlQ/Iraqi/Whatever gun toter is not carrying the
                    same load as an American solider in combat.
                    \_ The russians moved to a similar smaller round (which
                       is what the AK-74 fires).  There are still a lot of
                       AK-47s in circulation in Iraq, of course.  My point is,
                       the reduced fatalities are not due to medical advances
                       alone, but the changing realities of modern engagements.
                         -- ilyas
                       \_ "Alone"? No.  But a huge and seriously major part of
                          the reason why more solider survive combat wounds?
                          Absolutely.  Think of the Civil War era.  Shoot one
                          of those poor no-medical-bastards with a round of
                          any size you like.  The odds that what we now think
                          of as a simple infection kills them is extremely
                          high.  It doesn't matter how big a wound.  Medicine
                          gets better every year and what used to mean death
                          is now a routine fix.
           \_ Let's not let justified loathing of the war diminsh the
              achievements of the people fighting to keep our soldiers alive.
              I'm against the war, but I think the advances in medicine have
              been amazing and laudable.
              \_ I don't think anyone was dimishing medicines achievements.
                 Without them there'd be a lot more dead soldiers and others.
2007/10/2-5 [Transportation/Airplane, Politics/Foreign/Asia/India] UID:48225 Activity:nil
10/2    More on Blackwater:
        \_ Blackwater USA: Giving all mercs a bad name!
2007/10/2-5 [Uncategorized] UID:48226 Activity:nil
10/2    If you go to Build-a-Bear Workshop now, you will get a chance to
        win tickets to Hannah Montana Concert!
Berkeley CSUA MOTD:2007:October:02 Tuesday <Monday, Wednesday>