Slashdot Mirror
Google Takes Top Spot From Time Warner
newfoundry writes "BBC News reports that Google hit $80bn on the NYSE yesterday, so is now worth more than Time Warner..."
← Back to Stories (view on slashdot.org)
← Back to Stories (view on slashdot.org)
Google is truly a remarkable company. Innovation at its best... There's probably not a day in my life that I don't use Google at least ten times. I don't know where I'd be without it. One day, I aspire to work for Google myself... Keep up the good work, guys.
Nothing better than sane stock evaluations.
the article does point out that some analystis think that google is over priced. Anyone remember what happened to the AOL/TW share price?
Comment removed based on user account deletion
No seriously. It's insane. I scoffed at it's opening bid of $116.00 and just proved why I don't play the stocks :/
How many other geeks actually invested and how much? Any life savingers?
Yo Grark
Canadian Bred with American Buttering
This is not really all that surprising. Google has developed a loyal following amongst its users by:
1. Not suing their customers
2. Providing value (not a bunch of recycled crap)
3. not being evil.
I am sure there are many more reasons why Google is a "better" company than Time-Warner, however they escape me right now (disclaimer I am very tired and recovering from strep throat).
Beware of he who would deny you access to information, for in his heart he dreams himself your master.
"Some people think it's worth more than Time Warner."
Isn't that the very definition of worth?
Value only exists as an expression of people's faith.
Nothing. This is typical of dot-bomb tech stock overvaluation. Time will come and Google's stock will deflate down to reasonable levels when investors realize that Google doesn't make enough money to justify its percieved worth.
now might be a good time to sell it. I don't Google is worth that much, but I'm not a stockbroker so what do I know? When this thing pops its going to drop like a rock. It's better to make a profit now rather than be locked out when the selling frenzy starts.
Sure they could, same as AOL did most mergers aren't made with cash (although that changes from year to year). They just have to get TWX shareholders to agree to half ownership of the combined entity (which is basically what AOL did in 2000).
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
For some reason this reminded me of an old minimalist joke: --MarkusQ
The valuation comes in spite of the fact that Google's annual sales total just $3.2bn, a fraction of Time Warner's $42bn.
Search is important. Google does make money. Google is profitable.
But lets look at how they make money. They rely on advertisers. In other words, they rely on Internet commerce. That means Google's income growth is tied to Internet-based commerce growth. This does not spiral off into infinity! Much like eBay, there comes a point where the number of people setting up shop stabilizes, the income generated stabilizes, and therefore the advertising revenue expended stabilizes.
Google won't become less profitable because of this, but they can not grow to $80bn market capitalization on it either.
As another poster said, Google's got server farms and related infrastructure that aren't exactly worthless, but they are obviously barely a drop in the $80bn bucket. Having said that though, Time Warner is also an IP company. Physical DVDs, film reels etc. aren't worth too much really - it's the IP that you put on them that people are paying for.
It's still overvalued, but not necessarily for the reasons you said.
The P/E is already 111. So they think it can bear getting even higher? This sounds like investment house pump and dump, stuff we saw at the end of the 90s with the Internet boom.
Google would be foolish NOT to buy out companies using stock. Companies would be foolish to accept that type of buyout though.
As someone else said, some people think it is worth that much. Once the honeymoon ends we might see realistic values which I suspect are a third of what it is now.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
They could buy VA Linux (or OSTG or whatever they call themselves this week) and fire CmdrTaco. (Do no Evil).
Heh... Let's hope they do it.
"Rocky Rococo, at your cervix!"
The most amazing thing about this meteoric rise is what it says about a capitalist society. We hear a lot of moaning on Slashdot and elsewhere about how the Big Corporations are going to be around forever, and buy up every other corporation, and kill innovation. What people consistently fail to realize is that small companies are constantly rising up to destroy the old ones.
If you look at the list of the top 100 companies from 50 years ago, a majority no longer exist. If you look at the top 100 companies from 100 years ago, maybe, maybe 5 are still around. All the "big" corporations of today are supremely mortal. And their biggest vulnerabilities aren't to their main competitors, but to the small innovative start-ups, like Google.
Think about it: these two guys did some groundbreaking research, built something useful around it, and tailored the technology to their consumers needs. Now they are the highest valued media corporation, bigger than the goliath consolidated media giant AOLTimeWarner. Suing one's customers, buying Senators to write legislation for you, and being generally evil are not signs of impending oligopoly, but signs that the old dinosaur companies are going down the tubes, and will be devoured by a new wave of small companies.
The Rise and Fall of Online Community
A company's worth has absolutely nothing to do with income. Its worth on an open market tells you how much _profit_ the market players expect from it in the future. If Big Corporation Ltd. spends 50 billion to make 42.45 billion while Small Corporation spends 1 billion to make 4 billion, which one is worth more? Even better: What if Small Corporation is expected to grow exponentially without much added cost?
...50 times a day for many years. I've clicked on an ad maybe a dozen times in my life. I don't think any of those led to a sale. I wonder how long it will be before the advertisers notice this.
Doesn't it make you feel good to know that our freedoms are protected by politicans, lawyers and journalists.
Yeah, and what's great about the universe are:
1. Time
2. Space
Your #2 and #3 are broad, far-reaching categories that actually contain numerous reasons why Google is a better company. #1 is actually part of that, #3, by the way.
I would change #2 to be "providing services their customers want."
There are doubtless many manure companies that consider recycled crap to have lots of value.
Mod me down and I will become more powerful than you can possibly imagine!
And despite the objections to your post, you've hit the nail on the head.
Sure, the GOOG EPS of 2.53 is higher than the current TWX EPS of 0.72, but the P/E of GOOG is at a whopping 115 while TWX is at a much more classical 24.
A P/E this high is usually a strong sign of widespread enthusiasm for a company. You should exit under these conditions, not get in. To gain a profitable exit if you enter now, GOOG needs to either needs to hit an even higher P/E valuation or continue to maintain it's current unusually high valuation and substantially increase it's EPS.
If the GOOG valuation drops to more classical levels like, say, 30, then the EPS will neeed to be approximately 4 times higher than current just to maintain the ticker price.
For an investor, $1000 of TWX is much likely going to be worth more in the long haul than the same amount of GOOG.
=======
Science -- Sealed, Delivered.
Yup, some 2300 years ago, Democritus said: A thing is worth whatever someone is prepared to pay for it.
Except that he said in Greek of course...
Economists have been struggling with that concept ever since, but the simplest trader in a bazaar (ancient name for stock market) understands it perfectly.
Oh well, what the hell...
I think you misunderstand. We don't rail against the eternal corporation, they do indeed die. Often times, this is not a good thing though... it usually means they were killed by an even worse corporation. It's like locking 1000 psychopaths in the room with guns and knives, the ones that are left are the *worst* of the bunch.
All you are saying is that some of the psychopaths are female also, and assuming that they fuck around enough, babies are born. Gee, I wonder how that kid will grow up, eh?
The incredible thing here, is that with Google, that analogy has failed. Here's a company that at least as of now is *not* a psychopath. Some of us are so cynical wonder if it is one, but hides it well, others figure it's only a matter of time before it becomes one even if it isn't already.
This isn't a shining example of the success of capitalism, rather, it's an exception to the rule. Capitalism shouldn't be a religion, the invisible hand might have been gentle at one time, but now it rarely ever even gives you a reach-around.
Microsoft's market cap is about 275 billion, so Google still has a long, long way to go.
Not to mention Google's P/E is almost 5x of MSFT's - this means that Google will most likely not be able to sustain this value, let alone gain anytime soon.
There is no longer anything that can be done with computers that is nontrivial and clearly legal. -- Paul Phillips
Books are a communications medium
Newspapers too.
Television is another medium.
Radio is another.
Internet is another medium of communication.
Google is a company that is very concerned with the medium of the internet, and all of the sub-media that the internet uses (text, pictures, audio, video).
So, Google is a media company.
Get it?
Exam 4/C again. Maybe I'll do better this time.
From TFA: "Google is now worth $80bn (£44bn). This takes it ahead of media leviathan Time Warner, which is valued at $78bn. The valuation comes in spite of the fact that Google's annual sales total just $3.2bn, a fraction of Time Warner's $42bn. "
Google's market capitalization has nothing to do with being "worth" more than AOL Time Warner. The fact that Google has issued more stock and has a higher stock price than AOL Time Warner only means that Google has more publicly held debt. That's all stock is: publicly held debt.
Like privately held debt, Google must pay interest on the stock they issued. Those are called dividends. Additionally, Google may have to buy back shares at some point. Stock != value. Stock == debt. Earnings == value. Plain and simple.
From an investment standpoint Google is a tulip bulb. Let's compare the financials of the two companies at a macroscopic level.
TWX: Price of $17.08 on $0.73 earnings per share, giving a PE of 23.41.
Google: Price of $282.30 on $2.50 earnings per share, giving a PE of 112.92.
Simply put, Google stock is 112.92 / 23.41 = 482% more expensive than AOL's stock.
If you had $100 to invest TODAY, and your investment horizon was 1 year, and you had to choose between AOL and Google, this is how it would work out:
AOL: $100 at $17.08 / share = 5.85 shares. 5.85 shares * $0.73 earnings per share = $4.27. This is a 4.27% rate of return.
Google: $100 at $282.30 / share = 0.35 shares. 0.35 shares * $2.50 earnings per share = $0.88. This is a 0.88% rate of return.
The only way that Google can "even the score" and become a comparable investment would be either for the earnings per share to rise. The price of $282.30 is not sustainable given Google's earnings, and if you think that Google's stock price will continue to reside north of $200 you're smoking crack.
I'll continue to pick on Google financially and point out that in the state of Maryland, you can open a savings account at Bank of America where the annual interest rate for an account with $2500 is 0.55%. This is better than 0.44% and is insured money.
I love Google and think they provide wonderful services on the web. But as a financial investment I'd rather place my testicles in a vice and ask someone to squeeze rather than purchase their stock.
-c
Do it for da shorties
But those dozens of thousounds of old PCs happen to be running the best search engine in the history of the Internet.
I am a leaf on the wind. Watch how I soar.
This seems higly analogous to the situation where you have one electrical utility because to extend the reach of the grid requires interoperation with that utility's existing grid.
Please point me to an article that draws the distinction between these two and has the proper term for the Microsoft case.
Seastead this.
Um wrong.
1. You cannot compare 100 years ago to today. DMCA, invasion of privacy, etc
2. Corporate culture is a lot more organized now. Again, you cannot compare to what it was 50 or 100 years ago. The idea of lobbying and political donations is now an integrated part of strategy
3. The government has no balls now. Rockafeller was broken up. AT&T was broken up. Microsoft, proven to be a monopoly, was lightly slapped on its ass (more like a pat really)
4. IP and lawyer culture. There are companies being specifically made to gobble up patents
(link directly to server instead of coral cache.)
no, I used the coral cache intentionally to be nice to the server that is not mine, and of unknown capacity.
For more about coral see their homepage.
http://www.coralcdn.org/
music lover since 1969
Something to think about here is Wal-Mart.
Wal-Mart started out as a single store with a dirt floor (!). It was run extremely well by Walton, and he clawed his way to the top of an industry, beating out many established players.
While Walton was still around, Wal-Mart still seemed to have a heart. Now, it is hard to find a better example of the "soulless corporation" than Wal-Mart.
What's going to happen to Google when its "don't be evil" founders cash in their stock or retire?
That's exactly right. Google is growing right now, and it's buying other companies so that it can amplify its fundamental innovation (search) using the small companies' innovative products (picasa, keyhole, etc).
It's not trying to buy startup competitors, which is what large declining un-innovative companies do when they're on the defensive. When google starts buying other competing search companies, we'll know they've jumped-the-shark.
You're absolutely right that in 10 to 20 years we'll be talking about the new company that can make Google irrelevant. Many people on Slashdot talk about Google being the Microsoft killer. At first, it sounds odd: how can an OS/Office Software company be killed by a web search company? But when you realize that Google's innovation has started a trend which could make rich client software companies less and less relevant, you begin to realize that direct competition is not what kills corporations, but asymmetric competition that makes them irrelevant. I give 100:1 odds that the Google-killer will not not be a search company.
The Rise and Fall of Online Community
This is an excellent example of what happens when the founders of corporations die off--generally leaving their empire to their kids. I have worked for 2 large companies, that were fantastic, wonderful places to work. Until the founders kids took over, and turned them into horrible employers. power with no sense of accomplishment, or responsibility is a bad thing...
God may be on your side, but Lady Luck is MY bitch
Like privately held debt, Google must pay interest on the stock they issued. Those are called dividends. Additionally, Google may have to buy back shares at some point. Stock != value. Stock == debt. Earnings == value. Plain and simple.
.. um ... paid (whatever) to executives in options to dilute other owners or pensions to dilute future earnings or salaries to just make you angry or loans (rarely repaid) to make you hopping mad, and the stock price is an estimatation by the totality of the market as to what the company will be worth in current and future earnings and returns on investment. In general a stock price is close to, but not the same as, a bet on the worth of a company in six to twelve months from now, but in some cases - such as Google - this estimate is a lot of hooey or fluff.
... um ... investors are willing to pay for it TODAY.
Actually, a BOND is a debt. A Stock is a share in both the assets - and DEBTS - and potential earnings and losses, capped at a maximum loss of the total value invested (translation - you can only lose what you paid, no more).
A Stock has (optional) Dividends, which may or may not coorelate with earnings, but are usually a fraction as some money is saved in Cash (Google has lots), stolen
As an example, take my holdings in EBAY - which is highly speculative, so I've only got $4000 in that - it's based on a projected growth rate of DOUBLE what GE will make in the same 2-5 year growth pattern. Who knows if it's true? Noone.
Now, if you'd like to talk Bonds (DEBT), or Options (Risky Bets on the Future Price of a Stock), or Preferred Stocks, we could do so.
Regardless, Google is not worth more than the EU, no matter how you slice it. No matter what price fools
-- Tigger warning: This post may contain tiggers! --
Someone will start a new corporation that will make it irrelevant. If we were discussing this back in the 40's or 50's, we'd all be railing against this Sears & Roebuck monopoly on mail-order catalog and department store industry. Today, Walmart has innovated to the point where Sears had to merge with KMart in order to survive. The same thing will happen to Walmart in a decade or two, and the same thing will happen to Google not long after.
The Rise and Fall of Online Community
Personally, this simply levels the playing field so that the average family isn't penalized when someone dies. It has little effect on larger estates, as the wealthy could already play the hide-the-money lawyer game with trusts, funds, and so on...
Any sect, cult, or religion will legislate its creed into law if it acquires the political power to do so.
NASDAQ: A computerized trading system established by the NASD for over-the-counter stocks.
You are probably thinking about the Nasdaq Composite Index, COMPX.
Microsoft was never proven to be a monopoly, at least not by any objective standard. A monopoly by definition is an entity that is protected from competitors by the government. Microsoft enjoys no protection from the government and instead recieves regular crackdowns by our and other governments worldwide. The recent EU mandate that MS offer a version of Windows sans their own media player is repulsive. Who is the EU or any government body to set the terms by which a company provides its offerings to uncoerced customers? A court-ordered breakup of Microsoft would've been a complete inversion of the concept of justice and would hopefully be seen as the posterchild of the government's witchhunt against successful businesses everywhere.