Thoughts on Google

[clifp]

I just finished reading Inside the Plex a very good book about Google.

I was impressed with the company before I read the book and even more so afterword. Eric Schmidt, former CEO now Chairman, was one of two teaching assistants that I remember from college because he was so smart, the other was a really cute blond TA for German. By all accounts the two founders are technical geniuses, and are becoming very good businessman.

I have shied away from growth/tech/story stocks since retiring, because I realize that my understanding of the tech industry is so old that it is practically obsolete. Instead I primarily focus on dull dividend stocks with modest growth potential.

It seems by most measures GOOG isn't particularly expensive a forward PE of 12.1 is slightly below the SP 500 12.8 ratio. Price to Book at 3.2 and Price to Sales at 5 are both high but not at the crazy nosebleed level that we are seeing for the LinkedIn, Pandora's, RenRen etc. Growth is decelerating but still at 20%+ for the last few years.

Androids phones and the prospect of mobile search seems like some exciting prospects for future growth.

At $486 GOOG is just about 11% over the 52 week low and 25% the below the 52 week high. I am thinking that here or even better 460 to 470 maybe a good entry into the stock.

Have been swallowing the hype or is this potentially a good investment?

 

[growing_older]

I have no idea if it is a good investment or not. The people I know who are engineers there are all the best of the best, and they tell me they are working harder and having more fun than they ever did anywhere else.

 

[Surewhitey]

I've thought the same lately. I ended up buying INTC for a nice 4% divy @ $21.16. I do think GOOG is a good bet, but the stock appears to be broken as it went down today on a pretty positive day.

My recent buys are TOT, MSFT & PBI in the past 1-3 trading days...all for dividend plays on the down side of the trade.

 

[Nords]

At $486 GOOG is just about 11% over the 52 week low and 25% the below the 52 week high. I am thinking that here or even better 460 to 470 maybe a good entry into the stock.

Hmmm... Google, Berkshire Hathaway, or Apple. Hmmm...

I think the biggest obstacle to clear thinking on these stocks is the dividend. Executive hubris can waste staggering amounts of free cash flow, but a 45% dividend payout helps keep an eye on the business model.

Have been swallowing the hype or is this potentially a good investment?

I can remember snickering over what a stupid IPO Google would be because they had to use a Dutch auction gimmick to get anyone to pay attention... oh, yeah, there was that other problem over figuring out how exactly they expected to make any money.

I haven't really solved either problem.

 

[Texas Proud]

I think that Google is not a company that I wish to deal with...... from various reading etc. it seems they keep track of EVERYTHING that you do.. and never delete anything.... I do not like a company like that...

So, I would not invest in them... also, will ad revenue keep up I have never thought that the ads on the web were going to be worthwhile, but I think I have been proven wrong...

I will never click on an ad.... it just makes it more difficult NOT to get bombarded by more of the same or similar....

 

[clifp]

I think that Google is not a company that I wish to deal with...... from various reading etc. it seems they keep track of EVERYTHING that you do.. and never delete anything.... I do not like a company like that...

So, I would not invest in them... also, will ad revenue keep up I have never thought that the ads on the web were going to be worthwhile, but I think I have been proven wrong...

I will never click on an ad.... it just makes it more difficult NOT to get bombarded by more of the same or similar....

I'll defend Google here a bit. First, I will agree that Google does keep track of all kinds of stuff, probably more than people realize. However, this data collection serves a useful purpose in making things faster and easier for user. For example when I type 'e' into my browser/search the drop down display defaults www.early-retirement.org, pretty useful. According to the book after 6-12 month Google makes individual information anonymous.

While I don't think privacy is a particularly high priority for the average Google engineer, I think management understands the importance. I also think the both because of their better security and corporate culture. We just haven't heard of nearly as many headlines of "hacker breaks into Google and steal password, credit cards" as we hear from Sony, Yahoo, Microsoft, xyz Bank etc. Second Google has been commendable to standing up to both foreign authoritative government, e.g. China, but also Western government include the US, who have demanded access to internet data. Google routinely contest subpoena that other companies simply roll over on.

As far as ads, they pretty much pay for everything on the internet, along with TV, radio, newspapers, and magazines. I know people say they hate them, but it would be interesting to see how much Andy would have to charge for the forum if he didn't have ad revenue. Would you really be willing to fork over say $10 a month for this site? To me the great thing about internet ads is they are far more targeted and relevant to me than ads in other media, and yes this is a function of Google tracking information.

 

[rescueme]

I think that Google is not a company that I wish to deal with...... from various reading etc. it seems they keep track of EVERYTHING that you do.. and never delete anything.... I do not like a company like that...

Yeah - sounds too much like DW !!!

 

[Texas Proud]

I'll defend Google here a bit. First, I will agree that Google does keep track of all kinds of stuff, probably more than people realize. However, this data collection serves a useful purpose in making things faster and easier for user. For example when I type 'e' into my browser/search the drop down display defaults www.early-retirement.org, pretty useful. According to the book after 6-12 month Google makes individual information anonymous.

While I don't think privacy is a particularly high priority for the average Google engineer, I think management understands the importance. I also think the both because of their better security and corporate culture. We just haven't heard of nearly as many headlines of "hacker breaks into Google and steal password, credit cards" as we hear from Sony, Yahoo, Microsoft, xyz Bank etc. Second Google has been commendable to standing up to both foreign authoritative government, e.g. China, but also Western government include the US, who have demanded access to internet data. Google routinely contest subpoena that other companies simply roll over on.

As far as ads, they pretty much pay for everything on the internet, along with TV, radio, newspapers, and magazines. I know people say they hate them, but it would be interesting to see how much Andy would have to charge for the forum if he didn't have ad revenue. Would you really be willing to fork over say $10 a month for this site? To me the great thing about internet ads is they are far more targeted and relevant to me than ads in other media, and yes this is a function of Google tracking information.

I will be willing to take the extra few milliseconds from some other site than go with Google....

So they say about making the data anonymous... but I don't even want them to keep 6 to 12 months on me... sure... everything on the web can be collected and stored by anybody.... and if I hear that some other company is doing it I will stop using them...

I do not allow many cookies on my computer... and delete them on a semi-regular basis... I just don't think it is anybody's business to know what I do, read, search etc. etc... nor have a store keep track of all my purchases... it happens... I know... I just don't like it... right now Google seems to be the worst offender.... but like always, I could be wrong....

 

[ERD50]

I will be willing to take the extra few milliseconds from some other site than go with Google....

So they say about making the data anonymous... but I don't even want them to keep 6 to 12 months on me... sure... everything on the web can be collected and stored by anybody.... and if I hear that some other company is doing it I will stop using them...

I do not allow many cookies on my computer... and delete them on a semi-regular basis... I just don't think it is anybody's business to know what I do, read, search etc. etc... nor have a store keep track of all my purchases... it happens... I know... I just don't like it... right now Google seems to be the worst offender.... but like always, I could be wrong....

I'm trying to figure out just what problems you might foresee?

So Google tracks the stuff I enter in search boxes - why should I care? I suspect they are far too busy actually trying to make money (developing algorithms to target the ads I see) than to snoop into my private life (and they would be sooooo bored!). Because privacy is a concern, I suspect that it is actually pretty hard for any individual at Google to actually see data and know who that individual is. I imagine it is mostly aggregate data that humans look at, or individual anonymous data.

I suppose someone at Amazon for example, could see that I bought a bunch of stuff - would that make me a burglary target? Hmmm, most of it was gifts or bought for others (so I could have it delivered here and set it up). And how is that different than going to the local B&M where lots of people know you bought an item (maybe someone who doesn't even work at the store, they just hang around and look for big ticket items and follow your car home?).

I'm not saying you're paranoid, I'm saying maybe I'm missing something.

-ERD50

 

[Texas Proud]

I'm trying to figure out just what problems you might foresee?

So Google tracks the stuff I enter in search boxes - why should I care? I suspect they are far too busy actually trying to make money (developing algorithms to target the ads I see) than to snoop into my private life (and they would be sooooo bored!). Because privacy is a concern, I suspect that it is actually pretty hard for any individual at Google to actually see data and know who that individual is. I imagine it is mostly aggregate data that humans look at, or individual anonymous data.

I suppose someone at Amazon for example, could see that I bought a bunch of stuff - would that make me a burglary target? Hmmm, most of it was gifts or bought for others (so I could have it delivered here and set it up). And how is that different than going to the local B&M where lots of people know you bought an item (maybe someone who doesn't even work at the store, they just hang around and look for big ticket items and follow your car home?).

I'm not saying you're paranoid, I'm saying maybe I'm missing something.

-ERD50

I guess I will get the last thing out of the way first... I am not paranoid...


REALLY.. they ARE out to get me


To me it is a bit different than Amazon keeping track of what I buy and they try to figure out what else to sell me based on other who have bought what I bought... even though in a way I am not thrilled with that either...

But Google is keeping track of searches... why do they need to know that I was looking up teacher's salaries in Texas.... or the price of a boat... or the debt levels of the PIIGS... or underwater basket weaving for that matter... and how does that help them out putting ads on the site for me (except for the boat of couse, which I do not plan on buying for at least two years)...


Does it matter Not really, right now... because it is nothing about anything.... but it is the start of the slippery slope... people get used to them tracking your searches... then get used to them tracking you based on your GPS in your phone... then get used to whatever the next thing is that takes away a bit more of your privacy....

I still think the Bush easedropping on all calls (or whatever it really was) in the US, even though it might have been done by computers was wrong... I see this becoming the norm sometime in the future... I just hope we can push it farther and farther off by standing up a bit now on something that seems a bit trivial right now...

 

[ERD50]

But Google is keeping track of searches... why do they need to know that I was looking up teacher's salaries in Texas.... or the price of a boat... or the debt levels of the PIIGS... or underwater basket weaving for that matter... and how does that help them out putting ads on the site for me (except for the boat of couse, which I do not plan on buying for at least two years)...


Does it matter Not really, right now... because it is nothing about anything.... but it is the start of the slippery slope... people get used to them tracking your searches... then get used to them tracking you based on your GPS in your phone... then get used to whatever the next thing is that takes away a bit more of your privacy....

I guess I still fail to see where this is taking away any privacy (relative to 'real world')? Or where there is any real impact.

When I go to a B&M store, I've got a shopping cart full of stuff. Anyone in the store can see what I'm buying. The clerk rings it up (and often comments on the purchases). I take it out to the parking lot. Lots of people see me. Or maybe I'm just 'window shopping' (similar to an on-line search). Should I be worried that someone sees me in the flooring section? OMG - people know I'm interested in flooring! Am I giving up privacy? It seems that I give up more privacy in the real world than I do in the cyber world. I don't get what there is to worry about. Slippery slope arguments need a slope in the first place, and I don't see one.

I could see how GPS data could be abused - maybe I don't want someone to know I'm away from home for example (they could target my home for burglary), or a stalker could know that a victim is in an isolated area. But who has access to this info? If it is easy for a 'bad guy' to tie this all together, then that's a problem. I don't have a GPS enabled phone, so I'm ignorant of the issues here.

-ERD50

 

[Texas Proud]

I guess I still fail to see where this is taking away any privacy (relative to 'real world')? Or where there is any real impact.

When I go to a B&M store, I've got a shopping cart full of stuff. Anyone in the store can see what I'm buying. The clerk rings it up (and often comments on the purchases). I take it out to the parking lot. Lots of people see me. Or maybe I'm just 'window shopping' (similar to an on-line search). Should I be worried that someone sees me in the flooring section? OMG - people know I'm interested in flooring! Am I giving up privacy? It seems that I give up more privacy in the real world than I do in the cyber world. I don't get what there is to worry about. Slippery slope arguments need a slope in the first place, and I don't see one.

I could see how GPS data could be abused - maybe I don't want someone to know I'm away from home for example (they could target my home for burglary), or a stalker could know that a victim is in an isolated area. But who has access to this info? If it is easy for a 'bad guy' to tie this all together, then that's a problem. I don't have a GPS enabled phone, so I'm ignorant of the issues here.

-ERD50

The difference is that the people who are looking at you buy your stuff.... do NOT know who you are... even the clerk who comments will not know if you pay cash... sure, someone can follow you home like you say, but that is a different subject alltogether....


Google is following your online activity... which sites you go to etc..... and they keep it for at least 6 months.... so in your example... the clerk will follow you around the mall and keep track of you... and if you look at something they will come and say 'why not buy that at this store over here'.... but not just the mall, when you go on vacation, or watch you eat, or whatever... it is a wide net they are casting for the sake of whatever they deem necessay to keep it... I have not heard that Yahoo is keeping this info for any reason....

 

[clifp]

T
Google is following your online activity... which sites you go to etc..... and they keep it for at least 6 months.... so in your example... the clerk will follow you around the mall and keep track of you... and if you look at something they will come and say 'why not buy that at this store over here'.... but not just the mall, when you go on vacation, or watch you eat, or whatever... it is a wide net they are casting for the sake of whatever they deem necessay to keep it... I have not heard that Yahoo is keeping this info for any reason....

All of the search engines including Yahoo! do the same thing. Pretty much all of website do it is some form example the ER forums keep track of which threads you read. Google is just more ubiquitous and so they know more.

Generally speaking you can opt out of most web tracking at all of the major sites but it is PITA to do so. Here is Yahoo privacy policy you'll see the Yahoo keeps track of lots of stuff.

But it is interesting that your perception is that Google keeps track of more than other firms, if this is widespread it certainly is a reason not to buy the stock.

 

[Nords]

But it is interesting that your perception is that Google keeps track of more than other firms, if this is widespread it certainly is a reason not to buy the stock.

If he buys 100 shares then maybe they'll stop tracking him...

 

[Texas Proud]

All of the search engines including Yahoo! do the same thing. Pretty much all of website do it is some form example the ER forums keep track of which threads you read. Google is just more ubiquitous and so they know more.

Generally speaking you can opt out of most web tracking at all of the major sites but it is PITA to do so. Here is Yahoo privacy policy you'll see the Yahoo keeps track of lots of stuff.

But it is interesting that your perception is that Google keeps track of more than other firms, if this is widespread it certainly is a reason not to buy the stock.

Hey, thanks for the link.... I opted out from Yahoo...


I do know that a lot of sites keep track of what I do INSIDE their site... Google keeps track of what I do OUTSIDE of their site... there is a big difference...

I also have the choice of accepting cookies or not... I do not if I do not want the site to know whatever... if I trust the site, I accept...

 

[wildcat]

I just finished reading Inside the Plex a very good book about Google.

I was impressed with the company before I read the book and even more so afterword. Eric Schmidt, former CEO now Chairman, was one of two teaching assistants that I remember from college because he was so smart, the other was a really cute blond TA for German. By all accounts the two founders are technical geniuses, and are becoming very good businessman.

I have shied away from growth/tech/story stocks since retiring, because I realize that my understanding of the tech industry is so old that it is practically obsolete. Instead I primarily focus on dull dividend stocks with modest growth potential.

It seems by most measures GOOG isn't particularly expensive a forward PE of 12.1 is slightly below the SP 500 12.8 ratio. Price to Book at 3.2 and Price to Sales at 5 are both high but not at the crazy nosebleed level that we are seeing for the LinkedIn, Pandora's, RenRen etc. Growth is decelerating but still at 20%+ for the last few years.

Androids phones and the prospect of mobile search seems like some exciting prospects for future growth.

At $486 GOOG is just about 11% over the 52 week low and 25% the below the 52 week high. I am thinking that here or even better 460 to 470 maybe a good entry into the stock.

Have been swallowing the hype or is this potentially a good investment?

Hey Clifp. I don't know if it helps your investment thesis but Charlie Munger seems to be pretty high on Google and its moat. He made some recent remarks about the company. Munger's no dummy.

Buffett, Munger praise Google