Sorry Sheldon, but your largely emotional reaction to Google's current valuation seems to reflect a deep misunderstanding of Google's business model. First, as I noted last May, Google does not need a moat, it is not in a defensive position:

http://mnrtrading.blogspot.com/2007/05/moats-and-sappers-microsoft-and-google.html

Google continues to grow both in revenue and expanding its own market, using methods that are simple and successful. They continue to tap into Microsoft's cash flow thus progressively weakening their competitor.

Yes, Google does not have a moat, but they have a much more effective strategy than a moat.

ALS,

Thank you for your comment but you have added nothing. Last may Google was about where I thought it would be. Now it is way over. There is nothing emotional about it. You have no facts about Google data, they have not issued any. For all you know they might surprise to the downside of speculative expectations. All I have done is to reminnd investors that in the absence of facts, the rise is all speculation and guesswork. Maybe all is fine, maybe even better than fine -- but to state that you know something with no evidence makes you one of the false prophets.

I personally think google is way overpriced.

I agree. Google missed the Video. Google missed the Social networking bandwagon. Google groups is mostly unusable since everyone has to have an gmail account (per their website). Google docs is ok for free ish. I almost never look at the ads. All their apps are childishly simple, in beta, in need of some upgrades, or something. Unbelieveable. And they are way vulnerable. A good portion of my searches simply point me to wikipedia.

I don't think Google will ever 'crash' - but since you feel it may, put in a stop loss and try to enjoy yourself.

Thanks for the opinion anyway.
Mel

Sheldon, I don't bend to your imaginative biblical imagery, even if it is very creative. It is also unfortunately very distasteful. Too many innocent people have been hurt by such emotional epithets about false prophets.

More to the point, recall that YOU provided NO data in your posting, and the data I refer to was given in my blog postings. But to make this clear you, if that is possible now that you have donned your demagogue mask rather than respond in a civil fashion as an analyst, the "Google Data" which seems invisible to you is the size of the market Google is now in (phone, communications, logistics, database, applications, small business support, and venture capital). Even if you can't see the "numbers" Microsoft can, and they are spending billions to "build up the levees" before (as you seem to like biblical reference) the Google flood.

ALS,

I looked at your post as you suggested. I find it is full of the emotion you accuse me of and even has a portion dedicated to the topic so your implying anything of the sort in my story is a self justification of what you wrote to me. I also found no data regarding any financial information about Google or it's metrics that you refer to. As I stated in my story...how can there be any if Google did not release any? If there is any data it is certainly an extrapolation.

To date none of the features GOOG has tried and you enumerated have generated much if any revenue,...phone, communications, logistics, database, applications, small business support, and venture capital.

Specifically Barron's did a feature story questioning Googles poor use of invested capital and stating if it were used in the valuation of the company, then it is highly overvalued.

Actually, Google has a few moats; however, there is some question whether they are strong moats.

Google has become perhaps the world's experts at running geographically diverse redundant arrays of machines and disks. No one outside of Google knows for sure just how large this system is; however, most people estimate a minimum of 500,000 machines with some estimates ranging into the low millions.

According to http://highscalability.com/google-architecture, Google is up to 200 Google File System clusters (each cluster containing thousands of machines) plus 6000+ MapReduce applications (among other things, MapReduce provides the infrastructure to allow programs to be expressed and executed in highly parallel processes -- each new application provides additional infrastructure that can be used by other Google applications).


Microsoft and Yahoo and others have similar efforts in large scale computing...but at least from the outside, Google is in the lead and extending it everyday.

Bbut barring an astoundingly innovative approach, this infrastructure is the moat that keeps 2 graduate students in a garage from reproducing the success of Google in Google's market. Granted, anyone with a couple of years and several billion dollars can build their own similar infrastructure -- so this moat won't keep AAPL, AMZN, MSFT, and YHOO from coming to play.

Of course, not that many people outside Google know much about the tools inside Google. Which is part of Google's moat. ;-)

reinharden

I'm sorry, but what's a moat? Okay, I'll try to look up the biblical reference and understand what it means in terms of stocks.

I think Google is neutrally priced, and it depends what a person wants out of his investment and how long a time period one is looking at. It's P/E ratio is not out of whack compared to the industry. Google is not the only stock that has had a run in the last several weeks. A bunch of Internet-related stocks have gained just as much. So it seems to be more of a general sentiment of investing in the Internet than just Google itself.

Many many people highly value Google search, e-mail, docs, ads, maps, news, etc. by leaps and bounds over its competitors, and I am saying this just about the products and not in relation to the stock. I personally would pay $1000/year to use Google search even with the existence of Yahoo search free, because no one else compares by speed and relevance. I would pay to use GMail because no one else has "conversations" and the speed. I would pay to use docs because, well, I need it, and I don't know another competitor.

Free newspapers, radio, and television were never afraid that advertising would one day disappear. But even if it did, I don't think I'm the only one who would pay money for its services.

The biggest threat to Google is a genius competitor. But even Microsoft had a nice run of a couple decades before Google appeared. Yahoo is still around and growing and by comparison, I don't know why people use it.

reinharden makes the Google 'moat' point... I think it's hard to overstate how wide the moat is, particularly for companies saddled with older technology, like Windows. I expect MSFT to be crushed in this competition. They're built to own the desktop, and that's where they'll remain. Yahoo and Amazon will probably make interesting inroads, but I don't see anything topping Skynet, I mean, Google, technologically, at least for the next decade or so.