I should have known you would show up today. Haven't heard from you in months --let alone when Google was doing good. I didn't even read half you article because for some reason you and lot of other people love to bash Google.

35 pe ratio seems kind of wimpish and unamerican for such a large cap growth stock with such a generous 50% increase in earnings(which any growth stock would love.....ask ebay, yahoo, or others outside of tech with a 20+ pe).. Most large caps earnings grow at 10-20% on a good year not a quarter and the outlook for possible new industry and development is not as vast for them as a company like Google... But as you would know everyone has their own agenda.

God Bless our troops

Sue,
You must have stopped when you read your quote from before. Your "Google is 'doing good' is a dead givaway. If you were not a broken record you would not have given yourself away. On a serious note I do not think I was bashing Google at all just thinking out loud and hoping you or someone else might add their thoughts as to why Google is worth more. As was the case in previous griping comments you have made - you express your unhappiness with my rational but offer none of your own.

G,
Thanks for taking the time to comment. By this time next year Google will not be a 50% growth stock and will be lucky to do 25%. The 50% growth I allowed is for the rest of this year. Starting a year out and going forward GOOG is highly unlikely to do 50%.

I also think Cramer has alot of knowledge, but I would say that what he's doing now is only entertainment and pretty much useless as investment advice. Maybe Pamela Anderson could do a stock market segment on her new show. I think she would do just as good as Cramer. What's your opinion on todays big drop? Just a temporary correction, or the start of something big? Most of what I've been reading is "Don't worry, Don't panic, Percentage wise it isn't really that bad, put it in perspective, ...and so on. Comments like these should scare a contrarian.

Sheldon,
I enjoyed reading your article. Your thoughts on the matter are certainly very moderate and I would say more realistic and conservative that most peoples opinions on the GOOG. However, sentiment and emotional buying and hype will probably prevail, for the very, very short term anyhow and we could see a spike high of near $600 in the coming months. But, I suspect that what you are saying is more likely where things will settle and you know for those of us who are long term long that's not bad. Is it?

Google earnings growth will most likely continue to run at 50%+ for the next few years. The $300B advertising market is ludicrously inefficient, if Google doesn't get distracted with this "Google Apps" rubbish, they stand a good chance of capturing a large portion.

Don't expect to see much upward swing in their stock price this year. Actually dont expect it in ANY stock prices. From rail/truck tonneage it appears that we're already in a manufacturing recession, the residential MEW spigot has finally been tapped off, and commercial construction isn't looking good either.

What do the fundamentals about Google's business model tell us about
where the share price is headed?

In media, the money stays pretty close to consumer attention. We devote a lot of attention to Google, because its such a useful way to navigate the online world. Google is incredibly adept at monetising that attention, by selling it to advertisers.

However, as rich media like video migrates online, I predict a battle between search and recommendation (e.g. people who bought this also liked....), for the right to provide the most useful navigation of rich media. iTunes and Amazon provide good clues for what is coming - you don't generally use search to navigate round their sites. So the battle between search and recommendation to capture attention is a bit like the networks slugging it out for ratings.

Recommendation is probably going to win that battle. Why? This is over-simplifying but search engines search on words. A digital video file is a bunch of instructions for arranging pixels on a screen. Not that
helpful for a search engine. User generated metadata (tags etc.) is
probably not the answer for the mainstream consumer.

Bottom line: Recommendation will take attention away from search, and
when consumer attention goes you can no longer monetise it. The current valuation does yet not recognise this fundamental flaw in the search engine business model.

disclaimer: I shorted the stock a while back