Here’s a column I posted at globeandmail.com
on Google’s quarterly results:
“First things first: Anyone who wishes they had bought even a few shares of Google when it went public a little over a year ago, at the now bargain-basement price of $87 (U.S.), raise your hand Ã¢â‚¬â€ the one youÃ¢â‚¬â„¢re not slapping yourself silly with, that is.
Plenty of people (including yours truly, if you must know) scoffed at the idea that GoogleÃ¢â‚¬â„¢s stock would take off like a rocket after its IPO. Some analysts at the time were projecting a stock value of $145 a share and a total market capitalization for the company of $25-billion. Dream on, others said (including yours truly).
And where is Google now? Closing in on $350 per share, which would give the company a market value of almost $100-billion Ã¢â‚¬â€ just shy of Coca-Cola and a little behind networking giant Cisco Systems. Shares of Google jumped more than 12 per cent on Friday, after the company announced its quarterly results, results that blew the doors off most estimates.
Of course, one of the complicating factors when it comes to valuing Google is that the search company doesnÃ¢â‚¬â„¢t provide a whole lot of information about its business, and doesnÃ¢â‚¬â„¢t give forecasts for upcoming quarters, the way most companies do. For the time being at least, that is playing in GoogleÃ¢â‚¬â„¢s favour, allowing it to obliterate even the most positive forecast from Wall Street analysts. Among other things, the search leader seems to be changing a lot of peoplesÃ¢â‚¬â„¢ minds about the wisdom of a totally advertising-driven business model, and the growth in demand for Internet search-based advertising in particular, and it is growing much faster than the rest of the industry. Continue reading