So this is why I still think Google should buy Starbucks (NASDAQ: SBUX). It would allow them to convert some of their equity from soft assets to hard assets. See: Going to hell in a hand basket: Hard vs. Soft Assets.

Still True

• Google is capitalized at five times the size of Starbucks. It would be pricey right now, but is there anything much more pricey than Google stock? This would strengthen long-term cashflow and give them an inroads to many foreign markets.
• The two could cross-promote each other. After all, Starbucks is venturing into music distribution, movie promotion, broader food selection, kitchen accessories, etc. And both Google and Starbucks have vested interests in WiFI. What if Google handled all of the Starbucks WiFi?
• Google is trying to corner the market on advertising and Starbucks would be another great platform.
• What would be the network effect of adding YouTube to Starbucks in some fashion? What if Google became an outlet for Starbucks music and Starbucks became a place to sell things like YouTube DVD's -- maybe the 50 most popular YouTube videos of the year?
• Starbucks management could also teach Google management about social responsibility. They both claim this atribute, but Starbucks has the better track record and Google's "do no harm" is running into lingering questions with each new initiative.
• It is also a cultural icon. Just as many people are working on laptops as reading the newspaper during their lingering visits to the stores. Mr Schultz, chairman, has been promoting Starbucks as "the third Place," after home and office to spend time. Seems Google has the same thing in mind but thinks that place is cyberspace.

Some things to ponder.

Google was listed as the 17th largest US company in market value, $143 billion at the time of publication in the Forbes 500. Google sprang to that size faster than any company in history. It remains the only company that is not diversified, at that scale or anywhere close to that scale. And when you check on its standing according to revenue (10.6B), it drops from #17 to #241. For some perspective, a doubling of revenue would bring in about $21 billion and move them up the revenue chart 130 spots to #111, and doubling again would get it to #55 in revenue. Google has a lot of work cut out for it to rationalize the market value.

If, as some analysts have anticipated, it were to double in market value it would only be looking up at Exxon Mobile (NYSE: XON) and General Electric (NYSE: GE) and be third in market value -- not a likely scenario from my point of view.

Google's rapid growth has placed it in exclusive company at the moment, but if they do not diversify like other large caps, and like any high net worth individual would, it may not be in that company for long. I had previously posted Google and Monster.com...hmm -- that could work thinking Google needed to broaden it's base and this probably would be a less dramatic and easier fit. Just about that time they announced the deal to acquire DoubleClick, again at a high price, but it will work if it gets by regulators. One more thing, nothing Google can add will generate the kind of excitement and revenue of it's big search / advertising model. So like Yahoo, MSN and AOL, acquiring a myriad of new elements will not create significant revenue and like them Google might stagnate.

So if Starbucks wants to be that "third place" in the real world and Google wants to be that "third place" in the virtual world then they should join forces.

Disclosure: I own shares of SBUX.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.