Googling Future With Ghost of IPOs Past

Miller said the company ought to be worth somewhere between Amazon.com (AMZN Quote) and eBay (EBAY Quote). Legg Mason is the largest outside investor in Amazon and among the top-10 owners of eBay.

Since 2001, revenue at Google has grown almost twentyfold from $86 million in 2001 to $1.5 billion last year. In the first six months of 2004, revenue increased 141% to $1.4 billion and net income jumped 147% to $143 million.

While Internet bellwethers Yahoo, eBay and Amazon.com all earned more during the six-month period, none saw profits grow as fast.

IPO Memories

Google's announcement Monday brought me back almost 15 years when, as a cub writer for a newsletter called IPO Reporter, I followed a similar valuation debate over a tiny company with revenue of less than $50 million. Some said the company, known then as cisco Systems with a lower-case "c," was going to dominate the fast-growing market to supply corporate computer networking gear. Others complained it was an overpriced, overhyped sucker's bet.

Priced at $18.50 in February 1990, Cisco ended the year above $40 and didn't look back. Originally a play on the growth of computer networks within offices, the company experienced its greatest growth from the late 1990's Internet boom, when customers bought switches and routers to connect to the Web and expand the reach of connections across the globe.

In fact, if I'd invested my modest monthly paycheck in Cisco's IPO instead of writing about the debut, I'd have made more than $1 million within 10 years. Even after the Internet bubble popped, I'd be left with $250,000 on a $1,000 investment.

Google founders Page and Brin aren't planning to sell any hardware to rewire the Internet. And even that (arguably) revolutionary business has slowed dramatically -- witness Cisco's swoon from over $80 a share to Monday's close of $20.54. Of course, Google doesn't have to approach the $300 billion Cisco was worth at its height to validate its projected $36 billion IPO value.