http://blog.valuecruncher.com/2008/06/a-scenario-approach-to-valuing-google-goog/ Mon, 15 Mar 2010 19:38:10 +0000 http://wordpress.org/?v=2.7 hourly 1 http://blog.valuecruncher.com/2008/06/a-scenario-approach-to-valuing-google-goog/comment-page-1/#comment-619 noblow Sun, 20 Jul 2008 13:26:55 +0000 http://blog.valuecruncher.com/?p=228#comment-619 Excellent piece, and quite realistic, too. Google is currently hampered by the fact that they are a one-trick pony (today), with no product anywhere in sight that might grow to the same size as the search/advertisement combo today. Add to that the looming problems with the Youtube case, and you understand how fragile Google actually is. Also please consider that those who helped to grow Google might actually turn their back against the giant once a competitor (MSFT?) comes along with a better offer. Excellent piece, and quite realistic, too. Google is currently hampered by the fact that they are a one-trick pony (today), with no product anywhere in sight that might grow to the same size as the search/advertisement combo today. Add to that the looming problems with the Youtube case, and you understand how fragile Google actually is. Also please consider that those who helped to grow Google might actually turn their back against the giant once a competitor (MSFT?) comes along with a better offer.

]]> http://blog.valuecruncher.com/2008/06/a-scenario-approach-to-valuing-google-goog/comment-page-1/#comment-464 Mel Thu, 26 Jun 2008 11:31:59 +0000 http://blog.valuecruncher.com/?p=228#comment-464 I think the valuation is too low. Most of the input numbers look reasonable, however I cannot agree with your "terminal growth rate" if you set the "terminal capital expenditure" so high. The current CapEx of $2.5b is helping to push growth. If Google arrives at a mature stage in its cycle, and therefore becomes less innovative, I would expect CapEx and other costs to reduce greatly. If CapEx and workforce salaries remain high, then presumably it is because the Google engineers are still producing innovative products which will capture more profits. I think the valuation is too low. Most of the input numbers look reasonable, however I cannot agree with your “terminal growth rate” if you set the “terminal capital expenditure” so high. The current CapEx of $2.5b is helping to push growth. If Google arrives at a mature stage in its cycle, and therefore becomes less innovative, I would expect CapEx and other costs to reduce greatly. If CapEx and workforce salaries remain high, then presumably it is because the Google engineers are still producing innovative products which will capture more profits.

]]>