
Hey, Look Who's Now The 5th Biggest Company in the US - nickb
http://www.alleyinsider.com/2007/10/hey-look-whos-n.html
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mdemare
They're bigger than Toyota. And that's the No 1 carmaker in the world. They're
bigger than WalMart, bigger than any U.S. bank. They're valued at 13 million
dollar _per employee_.

This _can't_ be right, can it? There _has_ to be more money in selling cars
than in selling online text-ads, hasn't there?

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jetpack
Car makers have a very low profit margin. Toyota has about 7% (and that's very
high for cars -- GM has like 1%). Google has about 30% profit margin. There's
definitely a lot more money in cars in general (in terms of revenue), but
Google's net income for 2006 was $1 billion more than GM, despite GM having
about $197 billion more in revenue. Having high revenues doesn't mean you're
making a lot in profit, which is what counts.

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ajkates
Though, GM is probably not the best example...it's bleeding cash at the
moment, and has even had negative earnings some quarters.

If you want to play the profit game, compare Google's profit to Wal-Mart,
Exxon-Mobil, and CitiGroup. We're not even in the same league here. In fact,
we're not even in the same order of magnitude!

Again, Google making that list (and having a high market cap) is much more an
effect of it's expected growth (and high multiple) than it's actual present
value as a company.

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ctkrohn
Just nitpicking here, but Citigroup turned a loss this past quarter due to
mortgage-backed security writedowns. I think Google actually turned a
respectable profit.

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tptacek
This is a market cap ranking. Even Microsoft ranks on this list. Put it in
perspective: if you define big by "actual revenue" (as the Fortune 500 does),
Microsoft doesn't break the top 40. At ~10Bn+ in revenue, Google wouldn't make
the Fortune 100. Sort the Fortune 500 by profit and Google still isn't in the
top 20.

Market cap is a measure of the market's expectations for future profit. But
it's not a reliable one. Where's Qualcomm and Tellabs now?

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far33d
Revenue is a very poor measure of a company's success.

If anything, you should at least rank earnings, since that incorporates profit
margins. If I sell $5 trillion of goods at a 0% margin, that doesn't make me a
very successful company.

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tptacek
I agree, but market cap is a far worse metric.

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rokhayakebe
Geez. You scared the shit out of me. i was thinking "Facebook"

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hwork
same!

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ajkates
LOL, no offense, but that's just silly. Even with the ridiculous valuations of
15+ billion floating around, that wouldn't put facebook in the top 500, let
alone top 5.

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alaskamiller
that made me feel really small

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ajkates
Sorry! Wasn't my intention.

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ajkates
And with so little debt. Though, these rankings are done by market
capitalization. The true, sheer size of some companies ranked much lower are
actually much larger with regard to revenues and profits...they're just not
trading at 55 times earnings.

But, Google's market cap is indeed 5th. That's incredible any way you slice
it.

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mnemonicsloth
I love the phrase "trading at a not-preposterous 55x earnings"

Let's look at P/E ratios of their competition at the top:

XON 13

GE 18

MSFT 24

AT&T 30

Citigroup 8

Let's look at some other big web/software firms:

Oracle 26

Adobe 42

Yahoo 60 (40B market cap)

Amazon 100 (but only a 30B market cap)

Google's Market Cap is 220B. The older big software companies (Oracle, Adobe,
MSFT) seem to have been stuck between 20 and 40 for a while now. I conclude
based on this rigorous analysis that Google's eventual ideal P/E is around 30,
and that investor hype has inflated its value by around $110B, or about 1% of
US annual GDP.

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leeskye
Seems like Google is bigger than the rest of the players on the web.
[http://fishtrain.com/2007/10/30/google-worth-more-than-
rest-...](http://fishtrain.com/2007/10/30/google-worth-more-than-rest-of-the-
big-web/)

