For Some Veterans, Google Stirs Flashbacks
To be sure, Google's appeal is undeniable. Its shares have risen more than 350% since going public last year. And Wall Street analysts are predicting that the company will have better revenue growth in the fourth quarter than other tech giants, including its rivals Yahoo! (YHOO) and Microsoft (MSFT).
Because of its embrace by investors, Google, which was founded seven years ago, now has a market valuation of $112.7 billion, surpassing the $109 billion value of tech bellwether Cisco Systems (CSCO) and the $58.7 billion market value of Motorola (MOT). Even more remarkable: Google's market cap is creeping close to those of 88-year-old IBM and 168-year-old Procter & Gamble (PG).
Google has beaten Wall Street estimates for three straight quarters. Analysts' profit estimates for the fourth quarter range from $1.48 to $1.91 with sales seen between $1.15 billion and $1.91 billion. Yearly forecasts range between $5.39 and $6.18 with sales expected at $4.07 billion to $6.13 billion, according to Thomson Financial.
The wide range of estimates, coupled with Google's short operating history, make it difficult for investors to figure out if the company's shares are fairly priced."It's an intriguing company, but I don't know how to value this kind of company," said Hodges of First Dallas Securities. "Its obviously selling on promise, and their history is so short that you really can't make too many assumptions about." Google's rise also brings back memories for George Schwartz, president of Bloomfield Hills, Mich.-based Schwartz Investment Counsel, of other booming companies that investors pinned their hopes on, only to be disappointed. "There's always been cycles for mania," said Schwartz, adding that it's part of human nature. "People want something for nothing."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV