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Google Passes Exxon to Become Second-Most Valuable U.S. Company

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Re: Google Passes Exxon to Become Second-Most Valuable U.S. Company

#111

Post by wutbrodo »

gress wrote: post #99
boomzilla wrote: post #51

Earlier quoted context omitted.

The big reason investors are skeptical with Apple is that there is no guarantee they can pull the same revenue without creating a hit product every two years. Once the revenue starts to shrink, things go downhill very quickly.

That's far more true of Google which has produced only one successful product under very different circumstances to the ones they now find themselves. Google is literally unproven.

Assuming you're talking about success revenue-wise, Google has created at least three revenue-successful products: Search ads, their display ad network (i.e. display ads on different sites), and YouTube ads (i.e. display ads on their own site). (Note that this is ignoring the myriad smaller ads products they have that aren't as significant/massive revenue-wise). Calling these all "one product" is the same as saying "Apple makes revenue from only one product: sales to consumers". In fact I'd go so far as to say that these revenue streams are far more different from each other than, e.g. iPod/iPhone/iPad sales are from each other.

Re: Google Passes Exxon to Become Second-Most Valuable U.S. Company

#112

Post by bad_user »

throwaway_yy2Di wrote: post #48

Yet it's so small : XOM ('12) GOOG ('13) Revenue $453 B/a $60 B/a Profit $45 B/a $13 B/a Market cap $393 B $394 B https://en.wikipedia.org/wiki/Google https://en.wikipedia.org/wiki/ExxonMobil (101 for anyone who doesn't know this: revenue is how much you sell, profit is what's left over for shareholders, market cap is how much shareholders think that profit stream is worth). Relevant: check out wikipedia's rankings o…

That's not so bad.

The difference in my mind is that Exxon is making money from natural resources that are not renewable and the cost for extracting oil is on the rise. If they don't reinvent themselves, they'll die. Google on the other hand is making money out of software. Software is the artifact of our own mind. So the way I see it - for companies such as Google or Apple, the sky is the limit. For Exxon, unless they reinvent themselves, there's nowhere they can go.

And btw, isn't it awesome that software/hardware companies are starting to dominate the Top 10?

Re: Google Passes Exxon to Become Second-Most Valuable U.S. Company

#113

Post by nicholas73 »

tedsanders wrote: post #94
ihaveajob wrote: post #83

Earlier quoted context omitted.

I'm not sure that is a correct line of logic. Often, companies pump their stock prices by handing over dividends. That's a sign of a mature company, which can't expect to grow much, but is still valuable to its shareholders if it can provide results in any other way.

No, if the company pays out dividends, its price ought to fall. For example if a stock is at $100, and then pays out $5 in dividends, afterward the price will be $95. The company is worth less after giving away a pile of its cash.

It falls on the next day, but over time paying out dividends makes certain kinds of company stock more attractive.

Let's run an asymptotic example and say a company has $1000 in cash and $1 per share in profits. Since most of the company is cash you can't buy shares cheaper than $1000. But you might pay say 10x profit and thus the stock price is $1010.

If the company had paid out excess cash all along, the stock price would be $10 at 10x profit, and so every $10 you invest would give you a 10% return versus a 0.099% return. So investors absolutely do not want a mature company hoarding cash.

This situation is made worse because income investors would have pushed the price perhaps higher than 10x, but instead now punish you by paying less than 10x of profit.

Re: Google Passes Exxon to Become Second-Most Valuable U.S. Company

#114

Post by clarky07 »

bad_user wrote: post #112
throwaway_yy2Di wrote: post #48

Yet it's so small : XOM ('12) GOOG ('13) Revenue $453 B/a $60 B/a Profit $45 B/a $13 B/a Market cap $393 B $394 B https://en.wikipedia.org/wiki/Google https://en.wikipedia.org/wiki/ExxonMobil (101 for anyone who doesn't know this: revenue is how much you sell, profit is what's left over for shareholders, market cap is how much shareholders think that profit stream is worth). Relevant: check out wikipedia's rankings o…

That's not so bad. The difference in my mind is that Exxon is making money from natural resources that are not renewable and the cost for extracting oil is on the rise. If they don't reinvent themselves, they'll die. Google on the other hand is making money out of software. Software is the artifact of our own mind. So the way I see it - for companies such as Google or Apple, the sky is the limit. For Exxon, unless th…

And yet Apple is making Exxon type money and still has a multiple like Exxon instead of Google.

Re: Google Passes Exxon to Become Second-Most Valuable U.S. Company

#115

Post by nicholas73 »

mkaziz wrote: post #100
tedsanders wrote: post #94

Earlier quoted context omitted.

No, if the company pays out dividends, its price ought to fall. For example if a stock is at $100, and then pays out $5 in dividends, afterward the price will be $95. The company is worth less after giving away a pile of its cash.

What's the logic behind giving out dividends then, if you don't mind me asking?

The logic is really stock price management, as I answer above. A secondary reason is simply cash management. You don't want your managers feeling rich and simply wasting money on acquisitions or otherwise splurging on themselves.

Re: Google Passes Exxon to Become Second-Most Valuable U.S. Company

#116

Post by gress »

wutbrodo wrote: post #111
gress wrote: post #99

Earlier quoted context omitted.

That's far more true of Google which has produced only one successful product under very different circumstances to the ones they now find themselves. Google is literally unproven.

Assuming you're talking about success revenue-wise, Google has created at least three revenue-successful products: Search ads, their display ad network (i.e. display ads on different sites), and YouTube ads (i.e. display ads on their own site). (Note that this is ignoring the myriad smaller ads products they have that aren't as significant/massive revenue-wise). Calling these all "one product" is the same as saying "…

This is a fair perspective, although if Google can only make money from winner-takes-all properties that are monetized by advertising, their options are still severely limited, and they have not demonstrated the ability to do anything else.

Re: Google Passes Exxon to Become Second-Most Valuable U.S. Company

#117

Post by dragonwriter »

tedsanders wrote: post #94
ihaveajob wrote: post #83

Earlier quoted context omitted.

I'm not sure that is a correct line of logic. Often, companies pump their stock prices by handing over dividends. That's a sign of a mature company, which can't expect to grow much, but is still valuable to its shareholders if it can provide results in any other way.

No, if the company pays out dividends, its price ought to fall. For example if a stock is at $100, and then pays out $5 in dividends, afterward the price will be $95. The company is worth less after giving away a pile of its cash.

Thee is a certain logic there, but it's not reall the logic that drives stock prices. While it's true that the "backing" of a stock is a claim on the assets of the company in the event of dissolution, from which one could infer that distributing assets reduces the value of stock, the reality is that stock purchases are not based on valuation of the company—despite the fact that he whole idea of a market cap presumes they are—but on the expected value realized from the stock stock, which is driven by two things (1) expected payouts while holding the stock, i.e., dividends, and (2) expectations that someone else will be willing to pay more in the future for the stock (largely driven by perception that future growth or potential buyouts are not fully priced into the current market price.)

Establishing a practice of paying dividends feeds into #1 to increase the perceived value of holding the stock.

Re: Google Passes Exxon to Become Second-Most Valuable U.S. Company

#118

Post by lutusp »

corresation wrote: post #108
lutusp wrote: post #57

Earlier quoted context omitted.

> By that analysis, Google "left the station" in what, 2005? By that analysis, Google has most likely experienced the majority of its growth, and its current price reflects not only its actual value but the psychology of investors who try to buy into companies that are already successful, expecting that future returns will reflect past performance (the single most common investor mistake). > Buffet looks for companie…

EDIT: Given that lutusp is bizarrely distancing themselves from their own claims (or rather holding their comments as ever mutable and ethereal all-encompassing statements that mean everything yet mean nothing), this thread is futile.

>> Google has most likely experienced the majority of its growth

> That does not follow.

Qualified opinions don't need to follow logically. If I had wanted to make a testable claim about a deterministic outcome, surely I would have avoided saying "most likely". Imagine an airline pilot saying, "Folks, we'll most likely land safely today".

> You're stating completely subjective things and presenting them as fact.

Prove it. Did I assert my claim as fact, or did I say "most likely"? Which of these common English words is causing you the most confusion? Locate my use of the word "fact" or any of its synonyms.

> If you think you can call the market by the "it has grown, therefore it will fall" ...

That is not a claim I made, that is a claim you made. I don't have to defend it, you do. The burden of evidence is yours.

In short, you need to find someone else to have your non-debate with, someone else for whom you can invent their position, then argue against it.

Re: Google Passes Exxon to Become Second-Most Valuable U.S. Company

#119

Post by wutbrodo »

gress wrote: post #106

Pure speculation, given that Google hasn't launched a single successful product* since their IPO. *giving things away for free doesn't mean they are a success

Play is expected to be a $3.2 billion a year business in 2014. Where do you set the bar for "a successful product"? $5B/yr? Also I'm not sure if you're also excluding acquisitions from your arbitrary definition, but all the DoubleClick products (DFA/DFP/AdX) were post-IPO and are not even close to the same product as AdSense. Don't mistake "I don't understand what I'm talking about" with "anything that has the letters 'ad' in it must be the same product".

Re: Google Passes Exxon to Become Second-Most Valuable U.S. Company

#120

Post by valtih1978 »

3pt14159 wrote: post #64
brudgers wrote: post #32

Whoopdee shit. If Exxon and Google were both liquidated today which one would produce more cash? Google share prices reflect a speculator's premium. Exxon's better reflect the value of the underlying assets.

Exxon is sitting on a resource that will soon be replaced with a more efficient one: electricity. It is much, much, much cheaper to produce electricity in coal or nuclear plants and charge cars to run on the road than it is to refine gasoline and pump it into cars. Google is sitting on top of the most amount of information ever collected by any profit-seeking organization ever. Skate where the pucks going man.

More efficient? Are you on drugs?
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