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Technology Stocks : Alphabet Inc. (Google) -- Ignore unavailable to you. Want to Upgrade?

To: Gabriel008 who wrote (6264)	1/19/2006 4:44:00 PM
From: Gabriel008	Respond to of 15857

Here's a good article from TheStreet.com; Debating Google Some More 1/19/2006 3:49 PM EST Google (GOOG:Nasdaq) may be done going up, which I doubt and am not predicting, as Frank says, but it won't be because of click fraud, GDP growth or higher interest rates. Google stops going up when its growth rate slows and the 2008 earnings estimates look aggressive. That's my take. 1.) Click fraud: Non-event, already priced into ROI's, and if it was a real problem, people would stop buying online ads and revert back to print and TV. Also, I think Google offers so much in return to advertisers relative to alternatives right now, call it X, that it can have a 0.5X negative hit from click fraud and still be superior. This is Cody's story to tell, which I am looking forward too. 2.) GDP growth has nothing to do with secular growth stories, and won't mean anything to the online ad market, which is something like 5% of total ad-spend, for many years. That is, assuming it continues to take ad-dollars from traditional mediums like print and TV. We should not bet against this trend based on recent earnings from Yahoo that, while short of expectations, showed huge y/o/y growth. 3.) Interest rates are interesting. If interest rates go higher, it will probably trail continued GDP expansion (not saying it is real GDP, but nominal GDP growth is what it is, growth), so that nixes concern number 2. Higher rates reduce the present value of future earnings, but if we really priced Google on EPS in a traditional sense, it wouldn't be as high as it is trading today. Also, as long as the online ad market is taking share, overall ad budgets can contract without having any impact on Google's growth, in my view. Google is not cheap. If you were to consider what you are paying to own General Electric (GE:NYSE) or FedEx (FDX:Nasdaq), where you can see and hold the assets in your hand, you could argue Google is way overvalued. And if we see a prolonged correction, Google could get cut in half. But the key words in this paragraph are "could," and "if." Until any of these concerns are more in the "likely to happen soon" camp, I wouldn't sell all my Google. (Of course, I don't own any due to TSC policy) Also, I think it's safe to wait for evidence of a real threat to Google's corner on the ad-market, because you likely have several hundred points of the houses money to play with. So if you lose 50 points in a day, you aren't wiped out.