John Hussman, manager of the Hussman Strategic Growth Fund (ticker: HSGFX), took another shot at Google (ticker: GOOG) in his latest weekly letter. Extracts:

...we know that the highest price/revenue ratio for any stock with revenues over $100 billion is currently 2.4, that stock being General Electric. We also know that the two highest price/revenue ratios, among all stocks with revenues over $20 billion, are 6.9 and 5.1, for Microsoft and Cisco Systems, respectively. (Google currently sports a price/revenue ratio of 20.5 on $3.8 billion of revenues.)

...we know that total global advertising – television, radio, magazines, newspapers, billboards, and so forth represents about $350 billion at present, and is projected to grow about as fast as the global economy in the future, about 6.5% annually, according to PriceWaterhouse Coopers.

Total internet advertising is currently about 6% of that total, but let's project that 15 years from now, the internet share booms to 20% of all global advertising. Let's also assume that Google gets 75% of it. That's right, baby. 75%.

That puts Google's revenues 15 years from now at $135 billion a year, which is close to those of GE. Let's also assume that stock market valuations remain at a permanently high plateau, and that Google gets awarded the same rich price/revenue ratio of 2.4 that the market awards to GE, which again, is the most generous price/revenue ratio awarded to any stock with revenues over $100 billion.

We now have everything we need to calculate the expected return to investors:

Price_future / Price_today = (Rev_future / Rev_today) x (P/Rev_future / P/Rev_today)

= ($135 billion / $3.8 billion) x (2.4 / 20.5) = 4.159

Which implies an annual return on Google of [ 4.159 ^ (1/15) – 1 = ] 9.97% annually.

Bummer.

What if Google is the “next