Google stock up

[Undertoad]

I saw this happening with Yahoo a while back, and this week it happened with Google. The stock rose from 185 to 225 this week on the basis of the strength of its online advertising, which increased the company's revenue slightly upwards. Like 5 times what it had been previous quarter last year.

People couldn't believe that Google was worth what it was worth at its IPO, which was about 100.

This is the most fascinating business story of our generation: whether Google can grow *past* its development of a great algorithm for internet searching, into a continuing enterprise that repeats its search engine success in other ways.

They are hiring the best and brightest critical thinkers/problem solvers - people who relentlessly pursue problems.

[smoothmoniker]

Here's the thing ... if Google continues to be led and motivated by brilliant engineering, it'll be strong for a very, very long time. I think their biggest strength comes from the fact that their innovation is not driven by a need for market value. If something is a good idea, innovative, challenging, they give their engineers the head room to run with it, even if there's no obvious market value for it.

This increases the chance that they will develop truly useful and innovative products, and continue to exand their increasingly strong brand integrity.

-sm

[Happy Monkey]

Their slogan is "Don't be evil.", which is just about the opposite of how the current MBA corporate leaders are trained these days.

[breakingnews]

Larry Schmidt, Google's CEO, has said what Wall Street investors fear most: The company will be unconcerned with day-to-day numbers - withholding financial projections, paying little attention to per-share earnings - and instead will focus on long-term growth and, most of all, Google's master plan.

This might work for now - the entire world is still enamoured with the concept of Google and how fucking amazing the company is - but in the long run, and particularly after the first series of underperforming numbers, there will be lots of pressure to change this attitude toward shareholders.

That's fine for the stocks of the world's biggest companes, which do not trade as heavily as, say, technology stocks. Investors are vested for the long-run and know that firms like GE, Wal-Mart, etc., will continue churning out money by the billions. You might say the stock has some sort of physical value, as opposed to just brand value.

Which is what Google is riding on. Its intellectual property is priceless, but how much faith can we really put in technology - especially after the dot-com bust? WE know the value of computing and the Internet, but are we ready to consider a math equation the foundation of a blue-chip stock? Might analysts and investors get greedy and turn a shoulder to Google in five, 10 years, perhaps when the company is hitting stagnant territory, and demand that the company start watching its bottom line?

[glatt]

I like Google. I "value" the company. But I sure don't understand how the market determines the price. Yeah, I know. The market is what someone is willing to pay. But look at the numbers.

Google reports that for each share, there was a $1.29 profit for the last quarter. Good news. Better than expected. Wall Street expected a $.78 profit. That's $.51 more per share than was expected. The stock should go up a bit as a result. I would expect the stock to go up $.51 per share plus there would be a little bounce because people might think that since Google was surprisingly profitable this quarter it will always be that way. But the stock has gone up about $30-40 in the week since the news was announced. How do you get $30-40 out of $.51?? Google would have to keep up that profit for 80 quarters, or 20 years to justify that increase in share price. Google is good. But it's not that good.

Obviously, everyone on Wall Street disagrees with me, because the price is what it is.

I don't get it.

[lookout123]

no, not everyone on wall street thinks google is worth it. a lot of people who think good investing means looking in the rear view mirror think it is worth it. these are the same people that were threatening to pull their accounts from me when i wouldn't sell them TASR in the $50's and SIRI above $8.

speculation makes some people very very wealthy on the backs of those who won't listen to the voice of reason. especially in companies with short trading histories and/or limited circulation.

example:

Mr Customer: i think (real tech company) will go to $120.
Advisor: why?
Customer: because it went from $9 to $75 in only 3 years, with that head of steam how can i lose
Advisor: because... stream of logic, facts, figures, etc...
Customer: I'm buying from someone else at $75


5 years later:
Customer: why didn't you tell me (real tech company) was a bad idea? it fell from $75 down to $1.95, insert rant about brokers screwing people over.
Advisor: WTF?!?!?! get out. take your account with you.


2 weeks later:
Same customer: hey (search engine company) went from $85-105 in the opening hours. it has been solid for 6 months and now it is above $200. i want in.
Advisor: why?
customer: i hear it could top $300.

THWACK!
*sound of bat hitting side of customer's skull*

[busterb]

Originally Posted by Undertoad

They are hiring the best and brightest critical thinkers/problem solvers - people who relentlessly pursue problems.

Hell UT I thought all those folks worked for BUSH

[jaguar]

Yes but...microsoft hires an amazing number of kickass top-of-the-league engineers too.
Google produces cool stuff, no denying that but to me it seems to be coasting on on brandname at the moment rather than any key innovation. Lots of pretty little things and some impressive jscript but nothing that's made me go wow and the quality of searches under it all is not improving as far as I can see. Google have the right idea, they seem to be a few years ahead of most people in terms of where the money is going to be, a company driven by a vision of the future I've only heard from R&D boys but whether they'll pull it off is far from certain. Their method of making money isn't exactly buletproof either, click-fraud is a shit of a problem and their solutions don't strike me as particularly innovative so far. The company is dealing with some of the most complex technical issues one could, whether it'll be able to come up with real solutions I don't know.

Google do have one unique advantage in my eyes, they are probably the only company large enough to implement certain types of machine learning and have sample sizes big enough for it to actually work, I know they are doing work to do with this, I'll be curious to see what comes of it.

Of course I never bought into the whole wank of platforms being better than products so *shrugs*

[smoothmoniker]

Here's why I have a huge boycrush on Google -

A crucial watershed for human / machine interface is going to be the development of contextual meaning. Right now, if you say the word "fish", machines are very good at giving you 12 definitions for the word, 6 million examples of where it was used, the etymology, the brute translation into 35 other languages, etc.

What machines are very bad at doing is understanding the difference between "I was fishing for a compliment" and "I was fishing for trout." This is contextual meaning, and one promising route for developing this kind of interaction has to do with vast language data mining, collocating contextual markers (when 'fish' shows up in verb form near 'compliment', it has significance for the meaning) and response analysis (what response did this contextual meaning elicit, and how does that impact our understanding). Google's underlying technology looks to be very promising at doing this.

This is the brass ring of seamless human / machine agent interaction - getting an interface that has robust contextual recognition, that can learn your own contextual patterns, that can interact with other machine agents to develop meta-data to project potential meanings. Imagine a machine agent that can work through this internal process:

"My owner recently completed a master's degree in theology at this school, with these other people in his class. He seems to be using the word 'emerging' more frequently in his writing and conversations. There's a good chance that these other people who share his educational context and his social context are using this term in the same way. I should go mine the linguistic data from this very narrow, very specific group of people to see if I can develop a contextual meaning for 'emerging' when he uses it in certain ways."

I walk into the room and say "Beezle (my computer's name), is it too late to get a flight to that emerging church conference in San Diego"

Even if I've never used the word "emerging" with Beezle before, he has a very rich, very accurate sense of the meaning, and can draw an inference to the exact conference that I'm referring to based on that meaning.

Google's in a great position to be able to bring this together.

[Beestie]

My concern about buying into the stock parallels jags point. No product, but a method. It could last for a long time - they are an impressive bunch over there. But, then again, so was the Netscape gang. There won't be much loyalty when someone demonstrates that they can do the same thing better or easier.

Ebay, on the other hand, has a product - an intangible product but a product. And they have loyalty from their users. There's no "splitting up" the online auction business but if someone puts up a better search engine, two-thirds of google's users would be gone by the end of that week.

Google is a great company, and I could very well be wrong about this, but I don't see them being around fifteen years from now.

[jaguar]

Yes I agree sm, that was my last point however, trust me, I know a lot of people working on this stuff, it's still a long, long way off. There are already limited attempts at this that operate on google search, not that you'd know it most of the time but they also have a side effect.

At the moment searching for things on the web is still quite an art, it requires thought and careful structuring of a query that might include up to 10-15 variables subtracing words, forcing combinations, finding synonyms etc. When executed well you can really carve down your results to the good stuff. This kind of 'helper' software can get in the way and mess that up.

The other problem with that kind of second-guessing/automation is when it works, it rocks, when it doesn't it's a royal pain in the ass that wastes your time. It would have to be pratically bulletproof to be a net gain for a poweruser and that is a long, long way off.

Also, consider how much info about you google would need for that mate. That's quite a tradeoff in my eyes.

If I was going to sink money in online shares I'd do it in ebay and amazon, between them their infrastructure is running more and more of the web's e-commerce. Stores on ebay, Amazon is now running the ecommerce infrastructure for about 5 big UK firms and the trend looks set to continue. That's a powerful position.

Don't get me wrong, google could floor us all and take a position that would be pratically unstoppable but it's far from in the bag. The competition is getting better too, the new MSN search isn't all that shabby and gets a lot of traffic from default pages & dumb users and yahoo is making ground.

[breakingnews]

It's Google's mission that makes it such a novel company. They're tackling a task that no one has ever experienced, and the reason they're winning is because Google services, for now, are free, and there are no indications the company will start charging the average user. They're making money on the commercial end by boxing the search engine in a plug n play computer (yes, you can own your own Google search server for like $3,000), but revenue is about 95-96% advertising, an industry in which I have little to no faith.

But yes, GOOG is no different than Microsoft, Netscrap, AOL - companies that worked on getting people *to* the Internet. Google is just showing people how to *use* the Internet. It's building the foundation for ways we can *live* the Internet. What we don't know is if Google will be the one to do that in the long run, when the world is a massive interconnected fiber-optic orgy.

Apple did the same thing by commercializing the GUI. Mac OS made it possible to get on a computer and find/do what you want to do with so much more ease, relevance and speed than trying your luck at DOS or gwbasic. Apple also claimed to be an "ideas" company - but they packaged their product and sold it themselves at prices the marketplace would not tolerate.

I, too, vote that Google will either disappear or become just another player in a saturated market with a fraction of its projected market cap at current growth rates. Before the end of the next decade.

[jaguar]

but they packaged their product and sold it themselves at prices the marketplace would not tolerate.

I disagree, they simply chose to aim for the A/AA market rather than the B/C market.
Don't seem to be doing that badly for it.

[breakingnews]

Initially, though, they also went after the family/home market with those "budget" Performa models (and several other lines too - don't recall the names - and remember the Mac clone era?). Not quite B/C market, but apparent that they were trying for some of the mainstream.

Regardless, the point there is that it's taken Apple a few years (and firing/rehiring Jobs) to figure out how to capitalize on its approx. 2% share of computers - i.e., pioneer another consumer-product market and pray.

[xoxoxoBruce]

Originally Posted by busterb

Hell UT I thought all those folks worked for BUSH

Those are the evil twins.