GOOG

[Sniper]

Degen says...
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They do these things for brand loyalty. I am certainly brand loyal and cringe at the thought of using another search engine.

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Google responds...
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Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our base of users, advertisers and Google Network members will be impaired and our business and operating results will be harmed.

We believe that the brand identity that we have developed has significantly contributed to the success of our business. We also believe that maintaining and enhancing the “Google” brand is critical to expanding our base of users, advertisers and Google Network members. Maintaining and enhancing our brand may require us to make substantial investments and these investments may not be successful. If we fail to promote and maintain the “Google” brand, or if we incur excessive expenses in this effort, our business, operating results and financial condition will be materially and adversely affected. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brand may become increasingly difficult and expensive. Maintaining and enhancing our brand will depend largely on our ability to be a technology leader and to continue to provide high quality products and services, which we may not do successfully.

People have in the past expressed, and may in the future express, objections to aspects of our products. For example, people have raised privacy concerns relating to the ability of our Gmail email service to match relevant ads to the content of email messages. In addition, some individuals and organizations have raised objections to and sued us in connection with our scanning of copyrighted materials from library collections for use in our Google Print product. Aspects of our future products may raise similar public concerns. Publicity regarding such concerns could harm our brand. In addition, members of the Google Network and other third parties may take actions that could impair the value of our brand. We are aware that third parties, from time to time, use “Google” and similar variations in their domain names without our approval, and our brand may be harmed if users and advertisers associate these domains with us.

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Degen says...
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Of what you said the thing that got me most was that you know people there now who don't like it as much as before...I find that odd. I tend to look on Google as just beginning as a company, not as having peaked.

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Google responds...
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Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity and teamwork fostered by our culture, and our business may be harmed.

We believe that a critical contributor to our success has been our corporate culture, which we believe fosters innovation, creativity and teamwork. As our organization grows, and we are required to implement more complex organizational management structures, we may find it increasingly difficult to maintain the beneficial aspects of our corporate culture. This could negatively impact our future success. In addition, our initial public offering has created disparities in wealth among Google employees, which may adversely impact relations among employees and our corporate culture in general.

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[Sniper]

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How much did Google make?

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For the 9 month period ending Sept 30th 2005, roughly...
Net income of 1.1 Billion, on 4.2 Billion in Revenue.

[eastbay]

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Gmail is earth shattering

Have you used it? Do you ever want to use another email again?


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I do use it. It's good. It's also consumed probably anywhere from $100 to $500 of google's money for my personal use of it, and I've never sent a dime nor clicked a link that somebody would pay for from within gmail. In other words, they are losing money on me with gmail. I wonder if that is true in net.

I would not pay money for it. There are too many almost as good alternatives that are free.

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Google Desktop is earth shattering.


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Not really.

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They do these things for brand loyalty. I am certainly brand loyal and cringe at the thought of using another search engine.


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You're loyal in part because they are giving you free things that are costing them money. That's a pretty easy way to make friends, but it's no way to run a business. When it comes time to start charging for gmail, will that do anything for your loyalty, or will you feel a little betrayed, like they were some kind of drug dealer hooking you and now they're going to turn the screw on your wallet?

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Of what you said the thing that got me most was that you know people there now who don't like it as much as before...I find that odd. I tend to look on Google as just beginning as a company, not as having peaked.


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<cynicism> That's because you're completely duped by the google hype. </cynicism>

What do you think happens when a hundred billion dollars is rather suddenly infused into a company? Do you think the old google where newly minted geeky grad students who thought the most fun thing in the world was to stay up all night thinking up new search engine technology are unaffected by $1M, $10M, or $150M of equity? Money changes people, and it changes corporate culture. The people who used to spend all night at the computer are now planning their vacations in the Riviera and sitting around daydreaming about what color their Ferrari should come in.

You can also welcome the suit wearing business vultures of all stripes, who will systematically attempt to destroy the old google. It's inevitable.

eastbay

[Ed Miller]

Thanks Sniper for quoting from the SEC filing. [img]/images/graemlins/smile.gif[/img]

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If there share had split a few times and was worth $40 a share, I don't think people would respond this way. The fact that its $415+ ( [img]/images/graemlins/grin.gif[/img] [img]/images/graemlins/grin.gif[/img] [img]/images/graemlins/grin.gif[/img] ) is ruffling a lot of feathers it seems.

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I've heard this argument from several on the forum, and I think you should know that, while perhaps this might apply to some memebers of the general public, I doubt it applies to any of the nay-sayers on 2+2.

Each of us is sophisticated enough to understand that 400 times 10 equals 40 times 100. What people here think is overvalued derives from the $120B market cap, not the $400 share price. That wouldn't change even if the stock split 100-for-1.

[Evan]

If anyone is interested in taking a look at a Google valuation, Aswath Damodaran posted his on his website.

Website:
http://pages.stern.nyu.edu/~adamodar/

Direct link to excel file:
http://www.stern.nyu.edu/~adamodar/p...google2005.xls


We also get an email every month with quotes from Stern professors in publications. The October email included this:
The Wall Street Journal Online: Quite Contrary: Analyst Takes Contrarian Google View (Subscription Required)
October 28, 2005
In an article about valuing Google’s stock price, Professor Aswath Damodaran said he isn't surprised that analysts using the relative-value method find Google to be fairly priced or undervalued. They include in their long-term growth assumptions "whatever irrationality is driving the stock price today."

[Evan]

Munger's three investment principles that are posted in the Omaha office:
A great company at a fair price is better than a fair company at a great price.
(It's repeated three times)


One really good argument against shorting Google, which is basically inbedded in DesertCat's first reply, is that Google is (as much as a new company can be) a great company. Whether whatever it's trading for is a fair price is certainly debatable. Of course it's not a great price, nothing trading at 80x earnings is ever going to be a great price. It's probably not even a good price and it may not even be a fair price, but the point is that it doesn't have to be with a company that's run as well as it appears Google is run.

Of course we coulpd all find out in five years that Google's managers don't know what the hell they're doing and they've been falling ass backwards into a fantastic company for a few years now. Right now though, we don't know that and we don't have any reason to believe that. This is why shorting, particularly in this case, can be so dangerous.

[Evan]

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i know this complex for some of you out there...multiple this times its P/E ratio...that equals $764/share....will it get that high....most likely not, but who knows...all i know is, the stock is going to have no problems breaking $500/share

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I hadn't read this post before I posted Damodaran's quote below, but it really is something you should read. Also, your attitude is really uncalled for.

[Evan]

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Not sure why you would use free cash flow instead of earnings or revenue.

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Free cash flow produces real value. Earnings and revenue, while a factor in free cash flow, on their own only produce multiples that can be used to estimate free cash flow. When it's all said and done though, free cash flow is all that matters.

[Evan]

Ed, I know it's a little off topic in this thread, but I have a question for you. You seem to really be a big fan of KO. What is your opinion on EVA in general as a metric for management decisions?

[eastbay]

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Of course we coulpd all find out in five years that Google's managers don't know what the hell they're doing and they've been falling ass backwards into a fantastic company for a few years now. Right now though, we don't know that and we don't have any reason to believe that.

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Assumptions, assumptions.

eastbay