Comments on: On Google, Growth, Pricing Power, and Valuation Multiples

By: On Google, Growth, Pricing Power, and Valuation Multiples | My Blog

On Google, Growth, Pricing Power, and Valuation Multiples | My Blog — Wed, 26 Oct 2011 13:48:35 +0000

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By: Google’s long run game mechanics: Chasing the heat with paid links « ECPM BLOG

Sun, 20 Mar 2011 16:49:27 +0000

[...] like this are the closest thing Google has to exerting any form of pricing power, which Bill Gurley suggested that Google lacks and is one of the disadvantages of their business model: Google reached [...]

By: Daran

Daran — Tue, 14 Sep 2010 09:25:53 +0000

It is a lot easier to switch search provider (Google – Bing) than switching installed infrastructure (Microsoft, Cisco, etc). Look at the speed with which people switched from MySpace to Facebook; the same may happen to Google.

The tech-savvy are already fed up with advertising and installing filter software in their browser. Look for that trend to increase; another risk for Google.

By: Steve

Steve — Tue, 14 Sep 2010 05:41:41 +0000

I think GOOG’s relatively low multiple could have something to do with some of its less than shareholder friendly practices. For example, why doesn’t GOOG buy back the shares it issues through employee compensation schemes? It has the cash and the options + restricted shares are pretty dilutive. It also doesn’t help when the CEO doesn’t attend conference calls.

By: Adrian Scott

Adrian Scott — Sat, 28 Aug 2010 15:18:57 +0000

Neat analysis, thank you.

While GOOG may not have the opportunity to have its customers double their ad-spends easily, they can extract a higher-percentage out of their market-providing service, like Ebay did. Certainly that only works up to a certain point, but they have a strong position for that.

By: mark may

mark may — Wed, 11 Aug 2010 22:28:24 +0000

The dual class structure has been in place since the ipo. Theoretically, this risk factor has been discounted since then and would account for the recent under performance (I.e., that risk factor hasn’t necessary chgd of late)

By: bgurley

bgurley — Wed, 11 Aug 2010 16:17:33 +0000

I think this is an excellent question. Of course, it always hard to know. When the stock dipped to $300, they used this executive power to reprice every employees options. This is the kind of thing that happens with this structure. There is also a bit of an attitude that says “we don’t value shareholders”. You could be right.

By: PY

PY — Wed, 11 Aug 2010 05:16:48 +0000

Bill, do you think GOOG’s two-tier ownership structure would have anything to do at all with this seeming multiple discount on the common shares? Or is it a non-issue for most investors?

Given the passive roles taken on by large non-activist institutional investors (i.e. large mutual funds), I’m not sure how big a factor it is.

By: Jane Cooke

Jane Cooke — Mon, 09 Aug 2010 17:50:51 +0000

I would disagree only about the 1 billion foregone revenue on the home page. If they put ads there or filled it up, it would cost them 1 billion in losses. Their simplistic home page is their biggest selling point in organic search. But the rest of the points are perfect

By: Steve

Steve — Thu, 29 Jul 2010 03:29:33 +0000

If only we bought google shares years ago – how much do you think google shares will get to over the next year?