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October 20, 2005

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Anders Kargaard Jensen

Henry.. my man.. its not too late to get in the game I believe! I wrote an email to Google in January 1999, when they were 5 months old asking if I could purchase shares in them. Obviously the answer was no - later I found out who this Sergey Brin guy who answered my email was ;)

Still having Yahoo! shares, I also was reluctant to believe, that Google could outdo Yahoo! - so I didn't get in untill April this year. But man that was about time. However, I have not regreted, since the share then was $193 and now trading at about $340.

My point is:
If you believe the stock has a future - then don't stay out of it - just because you didn't buy as early as you liked. If you don't buy now - you will just feel like "shooting" yourself even more next year..

I blog about Google vs Yahoo! vs Microsoft at:
http://investinsearch.blogspot.com/

Anon...

RE: "But those who are only gasping at the stock price are missing the more astonishing part of the story."

I'll bite. What was(is) the "more astonishing part of the story"?

Pat

Besides the numbers (which are hard to comprehend), the thing that really impresses me about GOOG is their focus on process 'systemizing.' I think this is the key to their long-term success. With the right processes and systems in place, they can keep up with their heady growth. I would share my LT price target for the stock, but no one would believe it!

Chris Austin

What do you think about NTES?

Henry Blodget

Re the MOST astonishing aspect of the Google story...

In my mind, it's the cash flow and the relatively small amount of invested capital required to generate it. For a company that is only seven years old with only 5,000 employees to be generating about half the cash flow of a century-old company with 85,000 employees like Time Warner is shocking, especially given that the two companies are essentially in the same business (I know Google says they are a technology company, but, in my mind, the kind of company you are is defined by where your revenue comes from, and they are selling advertising, not technology).

Compared to Google's cash flow (approx $2 billion run-rate, half of Time Warner's), as well as the growth rate (50%-plus), the stock price seems less remarkable. Which doesn't mean it's not risky. Google has a zillion products but only one significant revenue stream--a situation very similar to, say, Yahoo! in 1999. If anything happens to the search growth trajectory, in other words, the stock will get creamed.

Anon

Henry,

Thanks for taking the time to explain what you believe makes the "Google story" astonishing.

Cheers.

Account Deleted

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