10/9 Time to short GOOG.
\_ 3/4 times I bet against GOOG when it should not have gone up
I lost big time. I'm not going to touch GOOG ever, again. They
are fuckers who keep screwing us average investors.
\_ When "average investors" are shorting, they're almost always
wrong. Don't bet against good companies. -tom
\_ What makes GOOG a good company?
\_ They provide a strongly-branded and effective web service,
and so far have avoided the pitfalls that have knocked
most of the other web services off the top rung. They
also invented a new business model for web advertising
that revived what was a declining field. -tom
\_ I'm not sure why Google's stock price is so high since it clearly
isn't justified by any financial calculation but the markets are
not rational. Do not bet against crazy people.
\_ GOOG's forward P/E is 33. What do you think it should be?
-tom
\_ Nothing. Forward PE is a fabrication and meaningless
swami-like prediction. What is current PE?
\_ It is silly to suggest that current PE is the only
"rational" method of valuing a company, particularly
one that's growing as fast as GOOG. Google's
revenues were 1.4B in 2003, 3.1B in 2004, 6.1B in 2005.
2006 will likely come in at 9B.
Earnings were .3B, .6B, 2B, likely 3B.
Do you think it was rational, in 2003, to value Google
as a company with a yearly earning potential of .3B?
What are your projections for Google's earnings in 2007?
-tom
\_ I didn't suggest "that current PE is the only
'rational' method" of anything. Google's income
is 99% from web ads of various sorts. It's an all
your eggs in one basket company based entirely on
ad revenues which has traditionally been a very
unstable market. Maybe they will somehow avoid the
long term ups and downs of the economy that hurt
other ad based business models but everyone thought
similar things in the 95-2000 time frame as well.
As far as their earnings for 2007, they are way too
secretive a company for me to guess and I do mean
guess such a thing. Anyone who comes up with a
number is just guessing (unless they're a in-the-know
insider at Google). I'm sure a number of people have
made a fortune off them but I won't invest my cash in
a place that prides itself on revealing as little as
possible to investors with nothing more than "We did
good before, trust us!" to go on.
\_ There are plenty of companies based entirely on
ad revenues which have been successful in the
long term: television networks come to mind.
It does not take "guessing" to project that
Google will continue to draw more page views
and generate more revenue in 2007 than it did
in 2006; choosing a specific number may be
little more than a guess, but choosing a range
is reasonable, and you can rationally base
valuation on your projected range. You said
that Google's value "isn't justified by any
financial calculation"; you're now backtracking
from that position. The current analyst
average projection for Google's 2007 earnings
is $13.09/share; they will earn almost $10/share
this year. Do you think $13/share is
irrational for Google's earnings? Do you think
the current valuation is irrational if Google
earns $13/share next year? -tom
\_ Television is a great example. Over time as
shows become popular or fade the various major
networks do better/worse in the ad wars. I
haven't back tracked from anything. I don't
know where you got that from. Whatever.
Anyway, this is still a company in a new and
ever changing market. At any time another
company could come along and turn the whole
business upside down. Before Google there was
Yahoo, Lycos, Hotbot, Alta Vista and several
others The analysts in the 95-2000 time frame
had all sorts of projections and now just like
then they are based on nothing. They have no
reason to believe Google will capture 30% more
of the market or any other metric. Yes, it is
quite possible Google has peaked on eyeballs
because there just aren't that many left they
don't already have. Then what? Anyway, it
probably won't be 07 or 08 but eventually they
will not exceed their previous quarter's
earnings, all the analysts will scream doom
and gloom and their stock will take a huge
hit. Once the sheen has rubbed off they'll
have to work their asses off to approach their
previous peak. As an aside I thought their
purchase of youtube was interesting. IIRC
that is their first big purchase of a
competitor in the Microsoft style of business.
Just taking note: a place that hires every
PhD in sight and famed for their ingenuity
made a similar product which simply sucked and
got stomped in that area forcing them to shell
out big bucks for a video storage and playback
site. Is Google now on the long term slide to
buying instead of building, no longer doing
that which made them great in the first place?
Time will tell. And for the record I do not
nor ever have traded the stock and never will
for the reasons I already stated so you're not
talking to a bitter short seller.
\_ It is certainly possible that Google's
business will decline at some point in the
future, but it is no more rational to expect
that than to expect that it will continue
to grow. Until I see Google making
specific mistakes which are going to cost
it market share (like Flash ads), I will
continue with the assumption that Google
will continue to expand at at least the same
rate as Internet usage. -tom
\_ I mostly agree with this. The thing is
that internet usage has a limit based
on the number of people on the planet
who can afford it and who care about
it. The real question then becomes what
are those numbers and that is something
they can't control. IIRC they've got
about 50-60% of the search market now.
Years ago they had about 50-60% of the
market. So either the market is poorly
defined or they're just not convincing
people to adopt their services at a
rate greater than they have in the past,
thus their growth is directly linked to
internet growth. If I was an investor
I'd still be more concerned about what
the youtube purchase implies than about
future internet growth though.
\_ Welcome back, Short GOOG at 100^H^H^H200^H^H^H300^H^H^H400 Guy! |
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