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Google to be Added to S&P 500 Index
hrbrmstr writes "According to marketwatch.com, Google is being added to the S&P 500, replacing Burlington Resources Inc. While this has provided a short-term boost to the stock price, time will tell what the overall impact will be on this respected index and the institutions (i.e. mutual funds) that follow it."
From Bloomberg
MSFT and INTC are both in the Dow Jones Industrial Average even though they are not listed on the NYSE. The Dow isn't exactly your folks' Dow anymore. Ironically, they are both getting closer to being the dogs of the Dow, anyone want to give odds on when that happens?
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
For us the Europeans who only care about EEUU only when EEUU means a new Natalie Portman film, coca cola (fuck you pepsi) or the pr0n industry, what is S&P?
Their gross profit last quarter was $372,208,000 http://finance.yahoo.com/q/is?s=GOOG .
In 1999 almost all of the internet companies had yet to have their first profitable quarter.
> Being added to the S&P doesn't affect me as a practitioner of IT
To be fair, you probably weren't in the article submitters or the editors minds when they decided to run this story here. Some of us buy/sell shares. Being added to an index is generally good for a company because it will automaticallly be added to any index-tracker that uses that index.
> Their stock price is inflated beyond belief and worth only as much as someone
> will pay me.
Every product, service and share price is only worth what others will pay for it.
It's particularly weird given that Burlington Resources is a reasonably successful oil and gas company, and oil and gas isn't exactly a market in economic downturn at the moment (or probably in the next decade or two).
Ah, wait, now I understand. Burlington Resources isn't really delisted, it was subsumed into Conoco-Phillips when they were bought out for $35.6 billion USD.
Now it makes more sense: Google is filling an empty slot in the S&P500, though the rationale for replacing a resource company with a computer-based service company is somewhat debatable.
Burlington Resources won't be listed anymore on the S&P 500 because they're being acquired by ConocoPhilips(also on the S&P500), so they're not really "leaving".
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Most of you here expect GOOG to enter DJIA. No not so soon. Any Dow component is a fully matured company, in other words their growth is limited to less than 9%. I really don't want GOOG to be one of those. Let it continue to grow at 40-50% a year :-)
For a company to be added to the dow it has to meet certain criteria
One of these is that the company has to be in existence for at least 25 years
http://otherthingsnow.blogspot.com/
"That's free stocks, which translates into free money on top of the increased valuation of your stocks over time ... "
Ah-HA! So you're the guy my old finance professor used to make fun of. When a stock splits, you don't get anything for free. The company is still worth whatever it's worth, it's just that now the stocks on a per share basis are worth half as much because you have twice as many shares. When I examine companies, I don't even bother with per share statistics, I look at the aggregate numbers only.
On the topic of dividends, whenever a company pays dividends, that equates to less money that can be invested back into growing the company. Unless you take your dividend checks and invest it in more stock of the same or similar companies, your total rate of return will be lower.
Bill Clinton: Pimp we can believe in. - The Shirt!!!
In 1999, these top-tier companies weren't making money, but you couldn't tell from their balance sheets. Have people already forgotten the accounting tricks that were utilized?
Many of these companies were showing positive EBITDA (operational profit before certain costs) at that time, because the market was just starting to demand it. Of course, it was all lies.
Google's profit is probably not lies. And even though they are completely inept with accounting and money (see their pre-IPO share registration scandal, their misstructuring of their employee stock option plans, etc.) it's also likely their profit isn't due to accounting errors either.
But it's also profit in a market with an extremely low barrier to entry, and so will require a lot of maintenance to keep that money coming to them and not their competitors.
http://lkml.org/lkml/2005/8/20/95