Monday, February 07, 2005

A Google Bubble?

From Rutland Herald Internet bubble is fluid.

I'm not as pessimistic as Fred Hickey, but I do think people, and analysts should look a couple recents events and reaccess the valuation of Google.

SAN FRANCISCO — Is the Internet bubble half empty or half full?

With Google's stock on a roll, prompting some analysts to predict it will hit $290 or more in the coming months, it can seem like the late 1990s again on Wall Street. Shares in Google have been trading for less than six months, but they have risen 142 percent and the company has a market value of $56.2 billion, equal to that of Starbucks, Nike and Southwest Airlines — combined.

"Of course we're in a bubble again," said Fred Hickey, editor of The High-Tech Strategist newsletter in Nashua, N.H., and a longtime technology stock analyst. But others say that Internet investors have learned to draw distinctions that many failed to make during the dot-com craze.

"The good news here is that investors are certainly proving themselves more selective," said David M. Garrity, an analyst at Caris & Co. in New York. "It's not like we're seeing Internet stocks go up wildly across the board. This isn't the 1990s when all a company had to do is put out a barrage of press releases and see the price go up."

Google is an advertising machine. They get paid from advertisers. Advertising is a cyclical business. There is NO BARRIER to entry for this business. Those are two very big variables to start with.

Pay per click fraud is another variable that is getting more press. Are those clicks really users? Or is there some center that is paid just to click on specific ads.

What happens when brand realize THEY have the power to control their own website traffic. Will there be such a great demand for keywords?

Next, Google just lost their second trademark case. Google's business model will be impacted severely (in my opinion) once we start seeing more trademark owners going after Google. Thats another huge variable that must be considered.


Google's revenue growth (as staggering as it is), is slowing down on a quarterly basis.

What happens when there is more Internet traffic from a mobile than a PC? Will advertisers shift their dollars there? Of course. There will be another Google-like player that provides the method for advertising then.

Find the company that can deliver advertising on a cellphone, theres your next Google.

1 comment:

Anonymous said...

Ten Things to Love about the "Goo".

Only the feeble might of the European Commission for competition can stand up to Google in its attempts to swallow up DoubleClick now. Appropriately enough the commission will give the results of its in-depth review of the takeover on April 1st.

All fools day will probably see Google (or 'Goo' as 'antigooglites' think of the internet company) make fools of us all. Google is like an ogre or the domineering bride of Shakespeare's 'Taming of the Shrew'.

Here are 10 Things to love about Google:

1. Don't you just love the baby name? "Oochy coochy Googly", but really more like the motherese of the step mom from hell.

2. Don't you just love the logo? "Look at all the bright colours, what fun". Like a toy, sanitized and censored by the overbearing parent.

3. Don't you just love that Mother knows best? "Don't question the results of your search. We have the big picture". Just see the nice adverts and pay up.

4. Don't you just love the dry diet? "Now now, everything you need is here". Where has all the mystery and spontaneity gone? Step mom knows best and she's going to keep her algorithms close to her suffocating chest.

5. Don't you just love the 'strip search'? "We know where you go and what you see so we can take care of you". Privacy, even alone with your computer, is a thing of the past.

6. Don't you just love the stalking cookie monster? "Trust us! We know where you live". It's a fatal attraction. Next thing you know they'll boil your pet rabbit.

7. Don't you just love being fair game? "We only give personal data to others that we trust". And the more they pay the more they're trusted.

9. Don't you just love the data bank? "Don't worry you'll never lose anything we can't find for you". With DoubleClick in the house there is so much data available that marketing becomes laser guided precision selling.

10. Don't you just love the greed? "Don't worry that $3.1 billion is way over the top for DoubleClick. Only the best for our service users and we can afford it". Actually we don't really need it, but we can't let anybody else have it either.

Shakespeare's shrew is saved by love but Google will probably get by the competition authorities with some promises of good behaviour around privacy. Watch this space for the alternative view!