When Morgan Stanley's (NYSE: MS) veteran Internet analyst Mary Meeker estimated that overlay ads on YouTube could immediately add $4.8 billion in gross revenue and $720 million in net revenue to Google's Inc. (NASDAQ: GOOG), her one-time competitor Henry Blodget was puzzled.
Her figures were dramatically bigger than his estimate of $12 million to $360 million of gross revenue. As Blodget discusses in his Silcon Alley Insider blog, Meeker made a huge mathematical blunder. She didn't calculate her estimates using cost per thousands (CPM), the common measurement used in selling advertising. She just forgot to divide by a thousand. So instead of $4.8 billion, Meeker really meant to say $4.8 million and $720 million becomes $720,000.
These ads are insignificant to Google's bottom line.
Blodget, who is turning out to be more honest as a blogger than he was as an analyst, clearly is delighting in jabbing the Internet Queen Meeker. It's odd that no one on her team caught this mistake before it was published.
Investors need to remember that analysts often are wrong. When they guess too low, as Wall Street often has with Google, it's called an "upside surprise" and when they guess too high it's called a "disappointment." This is a game that Blodget knows very well.
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Reader Comments (Page 1 of 1)
8-24-2007 @ 10:04AM
John said...
His numbers are dramatically above her "erred" numbers. Blodget # are 3x Meeker's adjusted numbers. Let's see how they reconcile their guesses err. estimates.
8-24-2007 @ 2:29PM
norman said...
Henry Blodgett is a discredited manipulator od facts and an unethical (to say the least) ex-financial analyst. How can anyone place any credence in his "opinion" when it was bought and paid for many times. His criticism of Mary Meeker, of untouched reputation, is laughable.
8-24-2007 @ 2:40PM
Sheldon L said...
Here are some real important numbers. If Google earns $18 per share over next twelve months it's forward P/E is around 28. If they continue to make any progress with YouTube revenue at somewhere in between our battling pundants and hold market share Google might be worth $600 in 12 months. Not the stuff investors are dreaming of but pretty darn good.
8-26-2007 @ 5:17PM
Jim Weaver said...
Meeker is not the only one math-challenged.
Don't you know the difference between 1000 times
and 1000% ?