Tuesday, December 07, 2004

Go, Google, Go

Fortune this past weekend (and Barrons the weekend before that) took a
bipolar approach to Google's overwhelming valuation. Bulls like
Morgan's Mary Meeker and Goldman's Anthony Noto argue that the high
double digit growth rate Google enjoys justifies a $185-215 price
range. Indeed, the company whose name has become synonomous
with "search" is growing faster than its peers--Amazon, Yahoo, and
eBay. Google, whose 60% gross margins are impressive, look to
capitalize on their brand over the next couple of years. Unlike Yahoo,
which is content focused, Google is heavily invested in emerging
technologies. Their new gmail service and desktop search program, for

The question is whether or not the little guy will be able to ward off
the Redmond, WA giant who lurks behind the tree--Microsoft's Steve
Ballmer was quoted recently saying he'll do whatever it takes to crush
Google. The grip Google has on search technology is by no means
inpenetrable so let's hope Google has its techie bees up at all hours.
And therein come the bears. Although few, some analysts think Google
is grossly overvalued, its quick ascent reminiscent of the go go days
of '99. Fortune noted that the organizational structure over at Google
headquaters has been slow to mature, reeking of the managerial chaos
that pervaded many startups.

Google is no start-up, however. Google is a great compnay with a bevy
of great ideas. But let's see what the insiders think. Over the next
few months, we should begin to see them unload previously restricted

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