Tuesday, December 13, 2005

8 Year Old Love Affair With Yahoo! Is Over - Part 3

If only I could have gotten into Google ownership back in January 1999, when they were around 12 people, the meteoric rise that would have been.

Instead of being clever and buy straight into Google when they first went public on August the 19th 2004 I kept my believe in Yahoo! Being able to catch up with the quality and usage of Google. No doubt a mestake since the clear market leader Google still today is gaining market share on search from both MSN and Yahoo! However, I made up for my initial mestake by getting into Google when it was below $200 per share.

Google is now above $400, but still has a long way to go up the stock chart I believe. It is a matter of time before Google will surpass Microsoft's market cap and also a matter of time before Google will be the first company ever to reach the magic market cap of US$1000 billion. I could be wrong, but this is my strong believe. Also I think that passing Microsoft will happen before 2010 (which means a maximum of four years from now). Being the first company at US$1000 billion will happen no later than 2015. Buying Google is on your own risk and I will not be responsible for that. However, the way I see it, Google is where I thought Yahoo! was going to be - Google is the company about to be the most valuable in the world. One of the reasons is that they deliver massive value both to consumers and businesses plus the fact that they can capitalize on this value.

Finally having tracked on the key figures on both Yahoo! and Google since April this year I felt very strong about Google! I always thought that I would keep my Yahoo! investment as a defensive investment to my Google holdings, but the recent more than 30% runup in Yahoo!'s shareprice since September this year to above $42 Friday a few weeks ago, made me think, that Yahoo! has become to expensive compared to Google. I am not talking about their share price, which you can not use for arguing a share price is high or low - since that argument is useless without talking about the amount of outstanding shares, and people often tend to leave this number out of the equation. What I am talking about is Google's EBITDA P/E being only 22% higher than Yahoo!'s and Google is after all growing more than twice as fast as Yahoo! on EBITDA. Plus they more than anything has the momentum on a range of key areas much more than both Yahoo! and MSN.

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