When Google Will Overtake Microsoft In Market Cap

It's a matter of time. Google WILL overtake Microsoft in Market Cap / value on the stock market. They have a better product and strategic position and Microsoft is no doubt threatened not only by Google but also cheaper or even free online software offerings.

Let's look at the current status:

• Microsoft valued at $161 billion
• Google valued at $110 billion
• Yahoo! valued at $18 billion

Compared to current number one this leaves the following status:

• Google is at 68% of Microsoft value
• Yahoo! is at 11% of Microsoft value

I once had an argument with a true Microsoft supporter (3 years ago). He said that Google NEVER would surpass Microsoft in value. I said that they would at the very latest latest 10 years from that time - which would then be 2015. Lets see - I will believe that Google will have a higher market cap than Microsoft before 2015 ends - probably a lot sooner.

Where To Invest Now

If you have to choose to invest in Yahoo!, Microsoft or Google the choice should be clear:

1. There is absolutely no reason to invest in Yahoo! currently. They are loosing on the search battlefield and don't really have any other drivers for growth in the near term
2. Microsoft still generates a lot of cash but the threat from free online software like Google Docs is a real threat and in the search area they are still loosing to Google
3. Google is in my view the only attractive investment of the three in the current situation. However, is it even attractive to buy in the current market with the uncertainties around the world? That is an individual choice and up to yourself
   

Arabic SEO and Arabic SEM launched

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So invest in SEO and SEM also in Dubai

So my point is: Investing in SEO and SEO is often the very best marketing investment you can make. Our expertise in Dubai First SEO is full service SEO and SEM for Dubai and UAE and Denmark.

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Launched Dubai First SEO with focus on SEO and SEM in Dubai and UAE

Last summer I quit my great job as Commercial Manager at One.com. It was three great years with a lot of online media buying across many European markets. But I thought that the height of the financial crisis was a great time to launch my own business. And surprise - it turned out to be.

Even though a lot of industries are experiencing tough times with less demand, then the SEO & SEM industry delivers so amazing value to its clients that even in these times the clients keep asking for SEO and SEM.

What I launched was Dubai First SEO with a focus on SEO and SEM in Dubai and UAE. The need for search engine optimization and search engine marketing in Dubai and UAE is huge. Lots of homepages needs optimization and really get dramatic results with a fair effort. As for SEM and Adwords there is also really a great potential as there are not that many active advertisers yet, which means lower prices for top spots on Adwords.

Okay its been almost 2½ years

It's been a busy time. Almost 2½ years since last I wrote. I got caught up in a couple of projects that took a lot of my spare time.

2 years ago I helped launch Elskerdyr.dk, where we in Denmark sell dog and cat articles with always a minimum of 3% going to animal charity. We are still going strong and fine tuning the business. My part in this is mainly working with our SEM (Search Engine Marketing) and coordinating a lot on our SEO (Search Engine Optimization). 2009 will be a year with nice growth for us.

Also I sold my last Google options before the end of 2007. I felt everything was a bit shaky at the time. I probably should have followed that hunch even more and stayed in cash. Instead I went ahead and bought shares in Google. They have lost around 45% right now, but still a lot better than options, which would have vanished by now.

I still believe big time in search and also in Google's future. Search as a marketing tool is by far the most efficient with the highest ROI of any tools. SEO should for all companies have 1st priority followed by SEM.

Google above $700 after 2007 Q1

Q4 should be able to grow Google's buttomline by 10% at least - as this
is the 2nd strongest Google/search quarter. However Q1 is going to be
the BIG Q as always for Google.. in Q1 you have 3 major months of
winter/media/Internet activity without any holiday season to take
peoples time away from media.

I see Google in $550-$600 in the first two weeks after Q4 come out
around 20th of January - and then at around $700 when the huge Q1 is
reported around 20th of April. My argument is simply that Google's P/E
does not get smaller than this (so the share can't fall without a fall
in profit) and the growth in Q4 and Q1 will push the share to $700
after Q1 is reported in April.

Buy Google, sell Yahoo!

This article is exactly my point. Read it buy clicking on the headline. Good work Rick Munarriz!

Tomorrow Yahoo! will post Q3 and on Thursday Google will. Expect Yahoo! to disappoint since they are still loosing market share to Google. Google in the other hand should do well from a growing online market of which they command a growing share. Also Google's substantial international revenue will be worth more this quarter since the dollar has been lower compared to Q2.

After this Q3 comes the two strongest quarters - Q4 and Q1. Expect Google to do very well in this period. Their annual growth is still around 80% while Yahoo!'s is around 20%. The difference says everything. Q4 is a banner quarter, but Google still does well here - while Q1 is bigtime search quarter.

Yahoo! Should Run Adsense

Google DOES have by far the largest group of advertisers and there is
no sign of Yahoo! catching up. Also Google's Adsense is far better at
maximising return on the pageview than Yahoo!'s Overture is. Yahoo! has
even publically admitted - that they will not catch up on Google. So
why don't they just go ahead and run Adsense? I am sure that they could
get to keep around 90% of the revenue and I am sure that Yahoo! revenue
would increase dramatically if they did. Adsense just is better
capitalisation than Overture.

Advantage - Yahoo! shareholders would get a lot better return on their
investment

Disadvantage - Yahoo!'s pride would hurt, and probably stand in the way
of this happening

Microsoft Will Lose To Google

Great article really! Dealing with the fact that this is a new game with new rules. Microsoft needs speed and friends - and has neither. Speed what do you mean? Vista will come out in no more than a year from now. Well - lets see about that.

The Reason Why Google Is Down: Big CAPEX

I read a great article called Capex Hits Big Techs by Cody Willard on TheStreet.com. He has a really good point and possible explanation to why Google is down - as is Microsoft. They are both really ramping up their spending on capital expenditure - hardware, infratructure buildings etc. And I remember that Eric Schmidt did point out in the Google Q1 statement that CAPEX would outgrow revenue for the rest of 2006. That of course reduces short term profit and can make some investors wary. However, I strongly believe that Google is investing in the right things and that these investments will pay of and keep Google ahead of the pack. Especially the idea of Google creating an alternative to the Internet is interesting. The more they grow (and they do a lot of that) the more reasonable the investment will be to them. If they can increase peoples use of Internet, they WILL increase their revenue. Its just a matter of time before the maths work out positively on this one and they will push ahead. Stay tuned for GoogleNet.

Google a bargain at $400

Ever since the day after Google reporting the record high 2006 Q1 the share has been trading down every single day - from $450 to now $400. Notice that this has been under small volume and therefore probably not as "bad" as it looks. There seem to be no apparent reason for this fall and the blogs and discussions boards (actually nice on Google Finance) also cry for a reason for this setback in the stock price.

Currently Google's EBITDA P/E is 29,7 only slightly higher than Yahoo!'s ditto at 26,1. It just does not make sense. Google by far is outgrowing both Yahoo! and MSN and should be traded at a larger premium. But then again - if you like bargains - I guess you have one now.

Today's story is Google complaining about Microsoft defaulting MSN Search in the new IE 7.0 browser - but Microsoft's defaulting of MSN in the browser has not stopped MSN from beeing a pathetic 3rd runner ever since it started out. I think Google can only rise from here!

Disclaimer: Buying stocks are full of risk - don't listen to me I could be very wrong yada yada yada..

Google EBITDA $1 Billion

For some reason Google did not report their EBITDA number - or at least for the first time I could not find it in their 2006 Q1 statement. I have found else where on the net, that it should be $1 billion. That is a pretty need number that gives them a yearly EBITDA growth on 83% versus Yahoo!'s EBITDA growth on a disappointing 26%. Why people still think that Yahoo!'s numbers where so great surprises me, because the numbers clearly show that Google is leaving Yahoo! seriously behind.

I expect Yahoo! to show yearly EBITDA growth going forward on 20%-30%, while Google probably will end up just north of 50% the next few years. Its still a high growth for the company, but obviously down from the previous EBITDA growth rates above 100%.

Added: This means that the growth from Q4 was 23% - where I was expecting 25%-30%.

Google Above $500 Before June

If you read my last post, you see why Q1 is the biggest quarter by far for Google. Last year proved that as well. I believe that Google can show EBITDA growth 25%-30% higher than Q4 - where people search less due to the holiday season. Q1 is the three months were nothing obstruct people from doing a lot of searches - ask anyone who buys keywords on AdWords.

If Google DO grow EBITDA 30% - I believe the share could grow 30% as well, as expectations are intact (stay around same P/E level). The math is pretty simple: Current share price of $410 - ad 30% growth - ad the same P/E that gives us a share price of $533.

Last year Q1 growth was 45% over Q4 - I believe 30% is more realistic this year. It took 1,5 months for the share price to adjust 45% up last year - that is why I say "$533 before June".

Disclaimer: Buying equities are FULL of RISK.. make your own choice - and remember its your own responsibility. I have been wrong before - and I will be wrong again ;)

Q4 Is Banner - Q1 Is Search

I was very surprised to see the sharp selloff in Google after their Q4, which I think they did really well. But too many analysts thought that when Yahoo! had sold out their banner space then Google would also be making tons of money - wrong! This has nothing to do with each other. I will explain why in a second. Google did make a lot of money, but not enough to satisfy most analysts.

In Q4 two things happen:

1. Most advertisers concentrate their spending here
2. Internet usage starts to slow a little from mid November due to holiday season activities like shopping for presents, x-mas parties, religious functions etc. etc.
   

This means that the slightly lower inventory is quickly sold out on the biggest sites. Great if you sell banners like Yahoo! But Google feel the slight decline in search activity. They can't force users to search more. Also I can say from an advertising perspective that we don't necessarily change the price we are willing to pay for a click on Google's AdWords. I must confess that the product I work with (webhosting) not really is seasonal, but I believe that most advertisers have worked out the optimal price to pay for a click on Google. So when search activity is slowing up to Christmas, then less people click on Google's ads and in the end it means slower revenue growth for Google. This is for Q4 obviously.

What happens in Q1 is:

1. Advertisers just spend most of their budgets in Q4 and so did most people - so demand for advertising is smaller
2. Search has its prime quarter here - all three months have the heaviest search activity

When you know that most advertisers have an almost fixed price on their keywords on Google and search volume really climbs from Q4 - then you understand that Q1 really is the greatest quarter for the search business by far. Google proved it already last year, when their 2005 Q1 EBITDA rose 45% from their 2004 Q4 - a massive growth to say the least. Thursday night after market close we will see if they can do it again. Personally I believe that they will show a very strong quarter, but a smaller EBITDA growth than 45%. I expect Google to skyrocket in after hours sending it above $450.

You can see Google's Q1 announcement and webcast from here!

Disclaimer: Buying stocks and options are full of risk - make sure you make your own judgment and remember that it is on your own risk. Yada yada yada..

Yahoo! was a sell at $42!

Of course that is easy to say now, when they are trading at $33, but back in November 2005 I said that Yahoo! was too expensive at $42 in November and was heading fast towards 30%-40% in yearly EBITDA growth (remember that Google has an EBITDA growth of 115% yearly).

When their Q4 came out they hit exactly 40% in yearly EBITDA growth, my guess is that when their Q1 comes out the 18th of April their yearly EBITDA growth will lie some where between 30% and 35% - probably closer to 30%. The money is in search advertising for very good reasons (that's were the buyers for advertisers products are) and Yahoo! is continuously loosing share to Google.

Personally I would not be buying Yahoo! above $26 (EBITDA P/E = 20). They are simply loosing to much ground to Google plus they have officially conceded their efforts in search. Their target is now to hold on to their market share, but even that seems too optimistic. When their growth soon will be 30% yearly on EBITDA and might even move lower - why pay a high P/E?

One thing that could work a little positive for Yahoo! is their new project to include text ads clickrate in their ranking. Instead of now where it is only how much an advertiser will pay per click. This will improve the revenue from their search listings. It should be rolled out at the end of 2006 - beginning of 2007. I have always wondered why they did not copy this clever thing from Google immediately, but maybe Yahoo! has been sleeping for too long.

Google to supply free Wi-Fi in San Francisco with Earthlink

Another great news for Google! Sure this is not the final decisive battle - but a really important head start on the way to develop a business model, where Google can make tons of money on local ads and develop new services! And even though they say that they will only concentrate on SF because all their employees live there and HQ hometown - then don't believe it. Its like when they told Yahoo! they would concentrate on being a search engine..

Google is here to make money - and its OK with me. And make money they will, when they blanket USA and later the rest of the worlds populated places with free Wi-Fi. The cost of providing it will go down each year, and the money to be made is going to go up each year. I believe that it will be a profit even from the start. A few years down the road it will become extremely profitable for Google. Remember that Google today generate about 1/3 of all online revenue, so even before they develop new services based on knowing peoples exact location and before serving local ads again based on location (which the competition won't be able to) they will actually make a lot just from the Internet usage rising because of free access!

Google to Replace Burlington on S&P 500

Google to Replace Burlington Resources on S&P 500 After Trading Close on March 31!

This is great news for all Google investors as mentioned earlier, since more fund managers will need to buy into the stock, because they benchmark their fund against S&P 500. This will have a positive impact on Google's share price.

And this is exactly what happened in after hours trading. Google surged 31,61 to 373,50 a jump on 9,25%!

8 Year Old Love Affair With Yahoo! Is Over - Part 4

Therefore I finally sold my Yahoo! shares at $42,72 a piece Friday the 25th of November when the company had a market cap around $60 billion. It made a nice 10 times my money back. The reason that I am no longer just keeping Yahoo! as a defensive investment is because I fear that it might stay below this $42,72 level for quite some time. There might even come opportunities to pick it up at a nice discount compared to this $42 ballpark. There are several reasons that Yahoo!'s shareprice might suffer substantially in 2006-2007:

• Google could surpass Yahoo! in number of users - making the last Yahoo! optimists (that they could catch up to Google) become realists instead - and realize that Yahoo! Can not just convert their larger portal audience to the world's largest search audience (where the money is). When they no longer have this hope to clinch on to, they might become Google investors and at the same time start selling out in their Yahoo! holdings
• When Google might be added to the S&P 500 Index, Yahoo! no longer has this blueprint advantage over Google - which is an important factor in the placement of funds from institutional investors
• Investors might start questioning if it is worth paying an EBITDA P/E of 37,5 on Yahoo! when the growth of the company is slowing fast towards 30-40% yearly, while Google EBITDA P/E at only 45,8 is only 22% above Yahoo! although the company is growing more than twice as much and sees a slower decline in it's growth rate than Yahoo!

The height of my Yahoo! love affair was probably when I got hired by Yahoo! Nordic in 2001 and it was two great years with a lot of learning and insight into global Internet businesses. I left the company two years later afraid, that Yahoo! International would shut down the small and money loosing Nordic entity, which also happened 9 months later. That gave me 1½ years of even more learning and insights at MSN, but that is another story. The point is - my love and belief now lies with Google instead of Yahoo! Right now it seems the most likely candidate to reach world domination and the title as "Most Valuable Company in The World".

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.