Google At Much Higher P/E Ratio Than Microsoft Was After 1,175 Days Public

As Google (GOOG) has gone from $500 to $735 since mid-August, its trailing 12-month P/E ratio has risen from 44 to 60. Judging by the historical price and P/E chart of the stock below, while 60 is a high valuation, it's not out of the norm for Google.

click to enlarge

For comparison's sake, we went back and looked at Microsoft's (MSFT) P/E ratio in the early stages of its public life. Although it was the growth story of the 80s, its valuation had fallen to much more reasonable levels by now. Google is now 1,175 days old as a public company. At that point in MSFT's life, the stock had a trailing 12-month P/E ratio of 21.

Comments

[GRiddick:]

This will end up being one of the most notorious falls from grace of our generation ... tech or no-tech.

Simply put, Google does not own enough assets with sizable barriers to entry to justify this kind of valuation. The world has gone crazy ... in my opinion ... much due to the fear of losing out to some of the emerging economies in today's Internet connected world (the BRICs as they call them).

But you don't solve that kind of problem by betting on the "old grey mare with the cool new name". Branding is obviously very important these days, but with virtually no barriers to entry or easy shifts of market share or reversal of fortunes in any of their market segments, a company like Google can fall from grace as quick as lightning.

Look waht agreeing to censorship in China, alone can do to a high tech company these days. It's un-American.

Combine that with the fact that a huge percentage of Google's revenues come from the advertising and distribution of digital content they do not own, and do not even have to rights to display and distribute, and this fall could be a very nasty one, indeed.

In my view, there is no justification in the world that can explain Google's trailing 12- months' multiple at 60 when Microsoft's in its initial hayday was only 21. Who's buying this "Hype"?

Probably the little old ladies in Omaha who depend on their brokers for "rock solid" financial advice. What a shame.

Thanks for bringing this issue to light.

George P. Riddick, III
Chairman/CEO
Imageline, Inc

[e-mail]...

2007 Nov 08 01:37 PM

[Patri Friedman:]

This seems like a pointless comparison to me, as Google & Microsoft have very different growth trajectories. Which is not surprising, since their industries (web search and desktop PCs) have very different growth trajectories.

2007 Nov 08 04:27 PM

[Patri Friedman:]

This seems like a pointless comparison to me, as Google & Microsoft have very different growth trajectories. Which is not surprising, since their industries (web search and desktop PCs) have very different growth trajectories.

2007 Nov 08 04:27 PM

[anonymouse:]

it's also pointless since market conditions were different between the two eras

2007 Nov 08 05:01 PM

[George Riddick:]

George P. Riddick, III is a man with a mission. A man with a singular and almost fanatical crusade to seek out and destroy those he claims to have violated his copyright and therefore should be burnt in hell (or pay out substantial amounts of cash, whichever the courts decide first, I guess)!

What George P. Riddick, III is possibly unaware of however, is that his collection of bitmap clip art is vastly out-dated crap that no one in their right mind apart from the odd backwater church community or primary school would ever nowadays use. Although he still viciously pursues and targets those as well.

With the immense and truly wonderful power of the Internet, search engines as powered by Google and Microsoft collect and index information that makes it easier for everyone to find images. Mr Riddick is ferociously against this as he believes they infringe his copyright by holding his images on their servers, and therefore people can search and use them freely.

(Read his comment to an article here:

seekingalpha.com/artic...)

Well, I guess of course this would be correct them if the images you are so fiercely protecting do not have a copyright watermark on them!

Oddly enough too, Microsoft, one of his hated targeted companies belongs to the Copyright Alliance Organization, of which George is also a proud member and hypocritically uses this fact when dishing out one of his so-called ‘official’ emails.

The ironic twist to all this is that the bitter and resentful George P. Riddick, III should look no further for international infringement than within his own collection of shoddy and archaic bitmaps. I noticed one example of the United Nations flag here:

www.imageline2.com/pag...

Now, even though such flags are ineligible for copyright they are still protected by ‘Article 6′ of the Paris Convention (Protection of State Emblems, and Names, Abbreviations and Emblems of International Intergovernmental Organizations).

I wonder if Mr Riddick therefore realizes that depicted images (including but not limited to photographs and two dimensional drawings) representing partly or in whole of the UN emblem, name and flag are STRICTLY PROHIBITED FOR DISTRIBUTED COMMERCIAL USE without going through proper channels of procedure and obtaining permission.

Mr Riddick claims to have never been accused of any violations within the last 25 years, well I have news, now you have. Yes George P. Riddick, III, you too are seriously infringing the industrial property rights of an international organization, how does it feel?

So Mr Riddick, before you continue your tiresome, pointless and self-indulging evangelistic campaign, maybe you should look nearer home, hold yourself accountable and add Imageline, Inc. to that All Company Listing you so condescendingly produce. And how about sending the United Nations a grovelling apology and one of those huge out-of-court settlement fees that you so enjoy collecting from everyone else.

And remember, an ignorant plea is never a defence in a court of law.

2008 Dec 22 08:06 AM