Wednesday, October 20, 2004

Google's Mysterious (Financial) Ways

Paul Kedrosky dissects the rumors about tomorrow's Google Earnings Call. It's an entertaining read that shows how little Wall St. actually gets most of the stuff that goes on in the real world. I think the real issues analysts should be concerned about with Google are a) how much of their revenue is locked in vs. transient b) how dominant are they in their respective markets (Google vs. Yahoo vs. AskJeeves or Blogger vs. MT vs. WP vs. livejournal) and c) is this ad-driven model sustainable and if so how much will it grow? Worrying about whether Sergey and Larry will be on the conference call is a little like worrying whether George Soros ate a grilled cheese sandwich for lunch today. Both data points, if true, turn out to have very little bearing on the long-term prospects of Google. Fave quote of Paul's:

But none of this silliness has hurt Google stock in any way, what with GOOG being up 75% from the search company's initial offering. Matter of fact, there is apparently some fear in the analyst community that others might be eager to play KGB right alongside the kids at Google:

Meanwhile, some analysts have speculated that Google's secretive ways are rubbing off on its peers. James Preissler, associate director of research at Majestic Research in New York, said Yahoo executives 'seemed more evasive' on a conference call with investors last week following release of the quarterly results. He added, 'It might be the Google factor.'

So, everyone's big concerns pre-IPO (including mine) were whether Google could maintain their culture in a post-IPO company where the old-timers were rich. It looks like they're not only sustaining their culture, but influencing everyone elses around them as well! Great job guys!


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