The Deipnosophist

Where the science of investing becomes an art of living

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Location: Summerlin, Nevada, United States

A private investor for 20+ years, I manage private portfolios and write about investing. You can read my market musings on three different sites: 1) The Deipnosophist, dedicated to teaching the market's processes and mechanics; 2) Investment Poetry, a subscription site dedicated to real time investment recommendations; and 3) Seeking Alpha, a combination of the other two sites with a mix of reprints from this site and all-original content. See you here, there, or the other site!

25 May 2005

Google/GOOG - dueling banjos

According to the WSJ, Bill Gates is still, first and foremost, about clobbering Microsoft's competition. And his current obsession is Google. "Google is still, you know, perfect," he told the crowd of technology executives attending the WSJ's 3rd annual "D" conference. "The bubble is still floating. They can do everything. You should buy their stock at any price." The world's richest man said those words with a wry irony that suggested ridicule of the Google craze, but also resentment. There may be hot air in Google's highflying stock price, but Mr. Gates clearly takes the co seriously. "We had a 10-year period like that," he said, equating Google's current standing in the computer world to that of Microsoft from 1986 to 1996. Mr. Gates's fear is that the increasingly ubiquitous Google search will become everyone's gateway into the digital world, a role he has always fought to preserve for Microsoft's Windows OS. The search is an elegant starting point, after all, why go anywhere before you have indicated what you are looking for? And Google has proved it is also a lucrative one, enabling the co to match advertisers with the specific interests of customers. As a result, Microsoft is determined to get into the game. "If anything touches on search," Mr. Gates said, "we're going to do it."

JP Morgan believes that Google's US business is outperforming in 2Q, driven by better than expected RPS and query volume. Additionally, the firm believes the international segment continues to perform well. As such, they are raising their 2Q rev/EPS ests to $870 million/$1.20 from $845 million/$1.14 (consensus $831.7 million/$1.19). Firm believes that monetization enhancements have increased GOOG's sponsored click-through rates dramatically, and will likely continue to contribute to higher click-through rates in 2Q. However, they are conservatively modeling no financial gain from those measures in Q2. Reiterates Overweight.

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