Investing - Don't Buy Google - Nubblies.net Forums

AcTivE · 04-26-2004, 08:41 PM

I believe a few people invest...I know I was interested in Google until I read this:

#332 - Don't Buy Google
The Investment U E-Letter
Monday, April 26, 2004

* * * * * * *

Don't Buy Google
By Dr. Steve Sjuggerud
President, Investment U

With up to $100 million in investment banking fees on the line, you can bet you'll hear a lot about Google's upcoming IPO. You'll even get a chance to buy it. But please, for your own good, don't buy...

Morgan Stanley and CSFB, the two firms in line for the huge payout in investment banking fees, will likely shove this deal down our throats when it's finally available. It will sound irresistible. It will be one of the largest initial public offerings ever. And the hype around it will be similar to Netscape's IPO in the late 1990s, which kicked off the Internet boom.

You remember Netscape, right? Netscape was an Internet browser. I say was, because according to current statistics, Netscape has less than 1% of the browser market today. While Netscape may have led the way, Microsoft now dominates, with its Internet Explorer browser.

We all know that Microsoft lets someone else figure the business out, then Microsoft powers in and takes over. In the search-engine world, where Google operates, Microsoft is gearing up to compete. And the competition is already tight, with Yahoo!, Google and Microsoft in the top three spots. AOL is not far behind. (And then there's Ask Jeeves.)

Here are a few critical questions to ask yourself about the upcoming IPO - questions that could save you from falling prey to the hype...

The Questions We Need Answered

Can Google win the search engine wars? Maybe. With Yahoo! and Microsoft, the competition will be tough.

Can Google make an extraordinary profit? Most likely no, with such exceptional competition and a relatively homogenous product.

Can investors make any money in Google? No. The shares will most likely be priced richly. The shares will be valued with the most optimistic of targets. Any disappointment will lead to a big fall in share price.

Even worse, the founders of Google haven't shown themselves to be interested in maximizing shareholder value...

Google's Goofy Founders

Google is expected to have a market value of up to $25 billion, making this little Internet search engine a larger business than Nike or Sears. While most businesses are run to generate a profit, Google, it seems, hasn't been run this way...

Bloomberg news reported today that "Google Inc.'s hesitancy to undertake a public stock offering may be the result of a long-running battle for control between its two founders and the financiers who first backed the Internet search engine. The two founders, Larry Page and Sergey Brin, who own perhaps 40 percent of the company, could become billionaires several times over if they take it public, the Times said. Yet they are less interested in cashing out than in maintaining their ability to direct Google's strategy and style."

While one can respect the founders' wishes, this is business. They are competing with Microsoft and Yahoo!

Again, will Google be successful? Maybe. Will it make extraordinary profits? Probably not. Will it be a great stock to own? Most likely, no...

Use Google as a search engine if you like. But when shares are offered to you amidst a ton of hype during the IPO, don't get suckered...

04-26-2004, 09:23 PM

While it's true you should never get suckered, I fail to see how owning stock in Google could be ruled off as a bad investment so quickly.

First and foremost: the price of the stock will not necessarily be priced richly. You must understand that the vast majority of sales of securities is still organizations, not your dinky little personal investor looking to make a profit playing the market. These organizations know the company inside and out before buying an IPO, while there are exceptions (the internet bubble of the 90s), large institutions are usually very cautions about becomming "irrationally exhuberant."

Google's competition is meaningless. Last time I saw the statistics, google has roughly 75% of all search engine traffic, such a large number that the government was looking into regulating it as a public utility. No newcommer, or even established internet company is going to push them off this edge, at least not very quickly anyways.

Quote:

While most business are run to generate a profit, Google, it seams, hasn't been run this way...

Are you kidding me? Google is very profitable, in the same way that Yahoo is profitable; you don't have to be selling a product to become a cash cow.

AcTivE · 04-26-2004, 10:16 PM

Quote:

Originally posted by DJ FC:
While it's true you should never get suckered, I fail to see how owning stock in Google could be ruled off as a bad investment so quickly.

First and foremost: the price of the stock will not necessarily be priced richly. You must understand that the vast majority of sales of securities is still organizations, not your dinky little personal investor looking to make a profit playing the market. These organizations know the company inside and out before buying an IPO, while there are exceptions (the internet bubble of the 90s), large institutions are usually very cautions about becomming "irrationally exhuberant."

Google's competition is meaningless. Last time I saw the statistics, google has roughly 75% of all search engine traffic, such a large number that the government was looking into regulating it as a public utility. No newcommer, or even established internet company is going to push them off this edge, at least not very quickly anyways.

</font><blockquote>quote:</font><hr />While most business are run to generate a profit, Google, it seams, hasn't been run this way...

Are you kidding me? Google is very profitable, in the same way that Yahoo is profitable; you don't have to be selling a product to become a cash cow.</font>[/quote]Google doesn't have 75% of the search market. Recently Yahoo dumped them, that lost them a lot. The ones they have listed as competing--make up an almost equal market.

And the different thing about all those is that it's more of a startup type page approach...they get a LOT of revenue from that type of stuff. There are also a lot of 'Yahoo' type product and services being offered (such as domain registration and hosting)

I thought Google was badass...but since then I've read a few articles. They have some revolutionary search engine technology, but I don't think that's going to carry them...

[ April 26, 2004, 08:17 PM: Message edited by: AcTivE ]

SittinOnDubsWGW · 03-21-2009, 09:46 AM

I LOL'd when I saw this thread at the "similar threads" at the bottom of the page when reading the foreclosed homes thread. When it was posted google was about to go public at $85 bucks a share. Current price is $330.

Google sets price at $85, stock expected to trade Thursday - Aug. 19, 2004

GOOG: Summary for Google Inc. - Yahoo! Finance

Ugly Bastard · 03-21-2009, 01:03 PM

Yea and it's been up above 600 before too. Obviously buying GOOG at it's IPO was a great investment just like buying it now is probably a decent one too.

vaga1220 * · 03-21-2009, 01:58 PM

Active fails so hard at making money.

Beebs · 03-23-2009, 03:42 PM

To be fair, it happened to GWB too, with TheTrain guy running an himself on him.

DJ FC · 03-23-2009, 04:56 PM

Quote:

Originally Posted by Beebs

To be fair, it happened to GWB too, with TheTrain guy running an himself on him.

Wait a second,

last time I checked google's stock is lower now than when I got into the argument w/ TheTrain. Granted most stocks are lower, but I don't think I was wrong when I was saying that the market caps implied by the $500/share price were a tad too high for Google.

f3lix · 03-23-2009, 10:08 PM

If you compared it to the S&P 500, by percentage, you'd have your answer.

Beebs · 03-23-2009, 11:14 PM

Quote:

Originally Posted by George W. Bush

Wait a second,

last time I checked google's stock is lower now than when I got into the argument w/ TheTrain. Granted most stocks are lower, but I don't think I was wrong when I was saying that the market caps implied by the $500/share price were a tad too high for Google.

Look at your own last post in that thread.

DJ FC · 03-24-2009, 06:12 AM

Quote:

Originally Posted by f3lix

If you compared it to the S&P 500, by percentage, you'd have your answer.

But a lot of companies in the S&P 500 have the same argument...

In fact lots of stocks were overvalued.

04-26-2004, 08:41 PM	#1 (permalink)
AcTivE 1 thing leads to another. Join Date: Feb 2002 Posts: 2,012 Internets: -2654	I believe a few people invest...I know I was interested in Google until I read this: #332 - Don't Buy Google The Investment U E-Letter Monday, April 26, 2004 * * * * * * * Don't Buy Google By Dr. Steve Sjuggerud President, Investment U With up to $100 million in investment banking fees on the line, you can bet you'll hear a lot about Google's upcoming IPO. You'll even get a chance to buy it. But please, for your own good, don't buy... Morgan Stanley and CSFB, the two firms in line for the huge payout in investment banking fees, will likely shove this deal down our throats when it's finally available. It will sound irresistible. It will be one of the largest initial public offerings ever. And the hype around it will be similar to Netscape's IPO in the late 1990s, which kicked off the Internet boom. You remember Netscape, right? Netscape was an Internet browser. I say was, because according to current statistics, Netscape has less than 1% of the browser market today. While Netscape may have led the way, Microsoft now dominates, with its Internet Explorer browser. We all know that Microsoft lets someone else figure the business out, then Microsoft powers in and takes over. In the search-engine world, where Google operates, Microsoft is gearing up to compete. And the competition is already tight, with Yahoo!, Google and Microsoft in the top three spots. AOL is not far behind. (And then there's Ask Jeeves.) Here are a few critical questions to ask yourself about the upcoming IPO - questions that could save you from falling prey to the hype... The Questions We Need Answered Can Google win the search engine wars? Maybe. With Yahoo! and Microsoft, the competition will be tough. Can Google make an extraordinary profit? Most likely no, with such exceptional competition and a relatively homogenous product. Can investors make any money in Google? No. The shares will most likely be priced richly. The shares will be valued with the most optimistic of targets. Any disappointment will lead to a big fall in share price. Even worse, the founders of Google haven't shown themselves to be interested in maximizing shareholder value... Google's Goofy Founders Google is expected to have a market value of up to $25 billion, making this little Internet search engine a larger business than Nike or Sears. While most businesses are run to generate a profit, Google, it seems, hasn't been run this way... Bloomberg news reported today that "Google Inc.'s hesitancy to undertake a public stock offering may be the result of a long-running battle for control between its two founders and the financiers who first backed the Internet search engine. The two founders, Larry Page and Sergey Brin, who own perhaps 40 percent of the company, could become billionaires several times over if they take it public, the Times said. Yet they are less interested in cashing out than in maintaining their ability to direct Google's strategy and style." While one can respect the founders' wishes, this is business. They are competing with Microsoft and Yahoo! Again, will Google be successful? Maybe. Will it make extraordinary profits? Probably not. Will it be a great stock to own? Most likely, no... Use Google as a search engine if you like. But when shares are offered to you amidst a ton of hype during the IPO, don't get suckered...
	___________________ 3:o) horned creatures...wat wat ___________________

03-21-2009, 09:46 AM	#4 (permalink)
SittinOnDubsWGW I make bad decisions. Join Date: Dec 2004 Location: The Desert Posts: 3,018 Internets: 108015	I LOL'd when I saw this thread at the "similar threads" at the bottom of the page when reading the foreclosed homes thread. When it was posted google was about to go public at $85 bucks a share. Current price is $330. Google sets price at $85, stock expected to trade Thursday - Aug. 19, 2004 GOOG: Summary for Google Inc. - Yahoo! Finance
	Last edited by SittinOnDubsWGW; 03-21-2009 at 09:48 AM.

03-21-2009, 01:58 PM	#6 (permalink)
vaga1220 * *Dislikes ham Senior Member Join Date: Jul 2005 Location: HELL 666 Posts: 1,515 Internets: 60790	Active fails so hard at making money.
	Putting the sensual in non-consensual.

03-21-2009, 01:03 PM	#5 (permalink)
Ugly Bastard Senior Member Join Date: Feb 2002 Location: U.S.A. Posts: 13,643 Internets: 247330	Yea and it's been up above 600 before too. Obviously buying GOOG at it's IPO was a great investment just like buying it now is probably a decent one too.

03-23-2009, 03:42 PM	#7 (permalink)
Beebs Poor Sport Join Date: Feb 2004 Location: Indianapolis / Middlebury / Long Lake Posts: 5,306 Internets: 127341	To be fair, it happened to GWB too, with TheTrain guy running an himself on him.

03-23-2009, 10:08 PM	#9 (permalink)
f3lix Gangnam Style Join Date: Oct 2003 Location: DH's Massage Parlor Posts: 6,383 Internets: 213510	If you compared it to the S&P 500, by percentage, you'd have your answer.