IMHO, GOOG is overpriced here. 20+ PE for megacaps is always a bubble independent of the company, its leadership, monopoly or whatever. Megacap just cannot grow at 20% clip for five years plus. And even if GOOG grows earnings at 20% for next 10 years (almost impossible) and then sells at 15 terminal PE, the annual return will be only ~12%.
Of course, everyone will claim that GOOG is different, it's Gorilla, Godzilla, King and everything else. And obviously overpriced Godzillas can become even more overpriced as we know from history.
I am not a fan of Schmidt. IMHO he chanced to get into a golden machine and was smart enough not to stand in its way. So maybe he was good. I doubt very much Page can do better. I believe he can't. GOOG holders should hope that he does not do much worse.
GOOG is still very strong search and advertising monopoly. And it is positioning itself to become a Microsoft-like monopoly in smart phone arena even though companies swore not to allow another Microsoft again. But it's almost a repeat of PC age: there's a Fruit threat and everyone rushes to an alternative: here comes MS-DOS, I mean, Android.
The only consolation is that companies may be able to sidestep paying GOOG too much, since the OS is kind-of free. So maybe GOOG will end up more like Sun with Java - Gorilla but broke - and less like Microsoft.
Disclosure: I have a very small position in GOOG that I have not sold yet. I as a consumer hope that we won't have Google monopoly anywhere although as an investor I should hope for opposite. |
