Google Fever
OK, so I suppose it's time to post on Google again, now that they have returned to the good 'ol tradition of clobbering analyst's estimates and risen to yet a new nosebleed level.
I bought my position in Google over the winter and spring and am now holding with an average price of just under $200. I have an outsize position in GOOG (get free real time quote from ADVFN
), so I'm not interested in adding any more at this point -- but I wouldn't argue with those who say that it's reasonable to buy even at today's levels above $340.
The problem, of course, is that it's impossible to gauge not only Google's growth rate, but their potential for new innovations and the growth of their market. Google is not only growing very fast in it's core search market, but even as that market itself grows it is continuing to take market share from Yahoo and the other smaller players. How can you reasonably expect to be able to project Google's growth? Will it continue to be 700% year over year? Probably not, but I certainly expect them to be able to grow earnings dramatically enough to justify their PE of 100 or so.
My thesis for holding Google as a core holding going forward remains the same as when I wrote them up after their last ("disappointing") earnings release: they are dominating their industry of internet advertising and search, which leads through the network effect to yet more success, and their founders and management are continuing to push for the development of new ideas -- not only through the hiring of thousands of new engineers and programmers this year alone, but through the development of a true culture of innovation that might make Google Labs this generation's Xerox PARC (though hopefully Google will take more corporate advantage of that innovation than Xerox did).
I would be a little bit surprised if they used their cash hoard to pick up a minority stake in AOL as it is widely expected they're considering, since that is very atypical of their acquisition philosophy until this point -- but I can see how it might make good short-term sense to protect a significant part of their market. I don't plan to buy or sell based on any AOL news.
I bought my position in Google over the winter and spring and am now holding with an average price of just under $200. I have an outsize position in GOOG (get free real time quote from ADVFN
The problem, of course, is that it's impossible to gauge not only Google's growth rate, but their potential for new innovations and the growth of their market. Google is not only growing very fast in it's core search market, but even as that market itself grows it is continuing to take market share from Yahoo and the other smaller players. How can you reasonably expect to be able to project Google's growth? Will it continue to be 700% year over year? Probably not, but I certainly expect them to be able to grow earnings dramatically enough to justify their PE of 100 or so.
My thesis for holding Google as a core holding going forward remains the same as when I wrote them up after their last ("disappointing") earnings release: they are dominating their industry of internet advertising and search, which leads through the network effect to yet more success, and their founders and management are continuing to push for the development of new ideas -- not only through the hiring of thousands of new engineers and programmers this year alone, but through the development of a true culture of innovation that might make Google Labs this generation's Xerox PARC (though hopefully Google will take more corporate advantage of that innovation than Xerox did).
I would be a little bit surprised if they used their cash hoard to pick up a minority stake in AOL as it is widely expected they're considering, since that is very atypical of their acquisition philosophy until this point -- but I can see how it might make good short-term sense to protect a significant part of their market. I don't plan to buy or sell based on any AOL news.
Labels: GOOG
This article posted by One Guy @ 10/24/2005 09:53:00 AM 1 comments
Add to: del.icio.us *Furl *Google *Spurl *reddit *StumbleUpon *Yahoo MyWeb *
Add to: del.icio.us *Furl *Google *Spurl *reddit *StumbleUpon *Yahoo MyWeb *
