Economist.com
The Economist magazine, published in Britain, is an unusually clear-headed publication. Here are a few snippets:
Not only is Google less strong than it looks, but an IPO might make it even weaker at a crucial moment, since Google is about to face simultaneous onslaughts from two fearsome rivals—Yahoo! ... and Microsoft
It appears that Messrs Brin and Page, aware of the bad timing, have been anything but keen on a speedy IPO. Instead, the push for a listing seems to be coming from two venture capitalists on the firm's board...
An IPO is “a tremendous distraction" ... “the investment bankers benefit most” ... Google does not need capital ... but it does need to keep a laser-like focus on its rivals.
In search, Google is now vulnerable because the barriers to entry to its market are low. This is the big difference between Google and eBay ... [which] keeps ahead of rivals due to “network effects” that draw traders to the most liquid market ... in search, network effects do not apply.
At its peak, some 75% of all internet searches touched Google's technology. But Yahoo! was only biding its time ... Now Google's algorithm touches a bit over half of all searches. Yahoo! is close behind.
Microsoft is also developing its own search technology and ultimately plans to integrate it into Windows ...
Matching Microsoft will require something even bolder. Google has decided to try to turn its own technology into, in effect, a new operating system, which will run on the internet rather than the desktop, so making Windows irrelevant. ... This explains Google's latest innovation, announced on April 1st: Gmail.
Alas for Google, its strategy got off to a bad start. Much to its own shock—the firm considers itself “the nice guys”—Gmail's e-mail-crawling, necessary for choosing the most fitting ad-links, has upset privacy groups. This is awkward. To become the storage medium of choice, Google, Microsoft and Yahoo! must each, above all, convince users that they are trustworthy.
[See posts on Google's mantra, Don't Be Evil, or my sister site www.dontbeevil.com]
Finally, and perhaps most menacingly:
“The search advertising market is mature,” ... “advertisers are not buying keywords anymore, they're buying topics,” which requires a different approach. As Google spreads out from search pages ... its people are “getting further and further away from their expertise.” In trying to morph into an operating-system firm or online ad agency, Google is less a leader than a novice.
Whew.
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| Google's prospects from a Google user and independent investor |
The Weakness of Google -- economist.com - 5/01/2004 10:53:50 AM
Another Take on Google Prospects -- New York Times 5/1/04 - 5/01/2004 03:49:25 AM
The New York Times > Technology > Google Poses a Challenge for Usual Ad Outlets
Google is a big threat to traditional advertising, Madison Avenue. Even the core mass-market ad buyers (Toyota, General Motors) are big buyers of Google AdWords now. In fact, demand is outstripping supply: With the growing popularity of search advertising, both Google and Yahoo are faced with a problem: more demand for advertising than they have Web pages available. Google has responded by building a network of other sites where it sells ads. But should Google diversify out of its historical sweet spot? "Search, broadly speaking, is the most powerful paradigm in advertising today," "They have many avenues for expansion without taking their eye off that ball.'' |
Nice Google Blog - 5/01/2004 03:16:18 AM
Very thorough coverage, good analysis. Tons of material, you could be here for hours.
Venturpreneur by Gordon Smith: The Best of Google Reporting |
Who, What, When, Where, Why, How - 5/01/2004 01:41:50 AM
Washington Post reporter Leslie Walker did an online chat session that brought out some new info.
To participate in the initial auction, you have to have a brokerage account at one of the two underwriters, Morgan Stanley or Credit Suisse First Boston. Neither one of these firms is known for their retail brokerage businesses (unlike Schwab, Fidelity, or TD)--in fact, CSFB caters exclusively to "high net-worth individuals and institutional business"--not exactly ideal to let the little guy get a piece of the action. Walker says "other financial institutions will soon join the Google stock offering," so don't rush out and try to open an account at Morgan Stanley just to get some Google shares. "The timing of the offering is not predictable yet." The SEC has 60 days to review the registration papers, and the banks haven't written the software to run the auction yet. And my personal favorite: I'm glad to see Google's self-image includes a high-minded sense of public mission ... they say things like, "Our goal is to develop services that improve the lives of as many people as possible--to do things that matter." They talk about retaining the purity of search results from undue influence by advertising. Refreshing talk for an IPO filing, no? This is the company's Don't Be Evil mantra, see my sister site for more on this revolutionary concept. A big risk: The barriers to entering Google's business are much lower than they with eBay's. Moreover, better technology--should, say, anyone invent it in the oodles of research labs out there--could quickly do to Google what Google did to its rivals a mere four years ago. And the other big risk: that Googlemania could artificially inflate the initial offering price, causing a lot of "little guys" who thought they were getting a deal to get badly burned. Finally, what makes Google so much better that all the others? I see two reasons. People tend to understand the first but not the second, which arguably is more important to Google's future prospects. First, founders Brin and Page devised complex mathematical formulas that yielded more relevant search results than the first crops of Web search engines did. However, the "link analysis" that was their secret sauce--analyzing how Web sites cross link to one another--has since been widely mimicked. Many folks think Yahoo's own search engine is now as smart as Google. Second, Google adopted a smart advertising system a few years ago. It matches text ads with relevant search results. This brings in almost all of Google's money. Yahoo bought a rival matching-ad technology, a company called Overture. These types of ads now account for the more revenue than any other type of Internet advertising. |
Google Search Overwhelmed by IPO Blather - 5/01/2004 01:17:45 AM
The Atlanta Journal Constitution (registration required) has a funny story that makes the case for this site, www.buygoogle.com!
The article, Google IPO a tangled Web, wonders how to sort through all the hype and blather: If Google is such a great search engine, why can't it come up with the secret to getting in on its initial public stock offering this summer? Looking for "Google IPO"? The search comes back with 494,000 links. Narrow it to "Google IPO price"? Try 183,000 possibilities. To get in on Google's IPO, you'll have to play by the decidedly unconventional rules established by the company. Try to estimate what the stock is really worth, and bid that price. "We think," they said, "that short term, speculation without paying attention to price is likely to lose you money, especially with our auction structure." Still interested? If so, the first step is to get a prospectus, which details Google's finances and the stock offering. For instructions, call 1-800-364-5990 at Morgan Stanley, or 212-325-1075 at Credit Suisse First Boston. |
Motley Fool: Stay "Far, Far Away" from Google - 5/01/2004 01:07:41 AM
Bill Mann at The Motley Fool has a thought provoking article warning investors to stay "far, far away" from the Google IPO.
"Google IPO? No Thanks" is brutal. Mann slams Google management for structuring the company so shareholders have little control over insiders. He says Google will be priced for perfection, at the top, nothing like Amazon or eBay. Mann recognizes that Google has terrific economics today, and awesome technology. But he argues that there's nothing so special there that another competitor can't take away. He says there's way to much risk to justify the probable 100-plus price-earnings multiple. Mann's most persuasive argument is that going public isn't necessary. Google has all the cash they need, the only purpose is to make insiders fabulously rich at the expense of the public. |
New Site, Don't Be Evil - 5/01/2004 12:51:14 AM
I set up a new site, www.dontbeevil.com, to explore Google's culture of integrity and honest dealing--Don't Be Evil.
The Google mantra, "Don't Be Evil," really resonates with me. I identify with Larry Page, the co-President of Google--he says, Don’t be evil. We believe strongly that in the long term, we will be better served—as shareholders and in all other ways—by a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company. It's a matter of trust. Google knows that users trust that search results will be the most accurate and relevant they can be--based on the facts, not driven by ad dollars. [Search results] are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating. Changing search results to get ad dollars without making that clear to the user is deceptive and wrong. Larry calls it Evil. I'm thrilled to see this message of integrity and fair dealing get broad exposure. I hope the Don't Be Evil mindset grows like a weed. To help it along, I set up www.dontbeevil.com. Check it out and let me know your thoughts. |
Created the www.buygoogle.com site today. This will contain moderated news of the Google IPO, plus reference material for ordinary investors who want to understand how the company is valued and how to participate in the offering.
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| buygoogle.com |