http://biz.yahoo.com/cbsmb/050609/08cc66f42eec43c4aab19c2d8bb37527.html?.v=1 -------------------------------------------------------------------------------- LONDON (MarketWatch) -- Merrill Lynch raised its 2006 revenue estimate for Google, Inc. to $5.2 billion from $5.1 billion, saying it expects the company to continue to benefit from the growth of the paid search format and capture more of the growth due to a better ability to withstand market share loss. The broker estimates that total U.S. online advertising to increase 29% to $12.4 billion and reach $25 billion by 2009. --------------------------------------------------------------------------------- LOL, suprise suprise.
So let's see. GOOG has 3.8B in sales, and 700M in income, that's about 18%. Let's say they grab each and every new ad dollar coming in between now and 2009. That's 19.2B, time 18%=3.5B in new income plus the old income of 700M equals a grand total of 4.2B income on a very good climb to 2009. At a market cap of 76B that's a P/E of 18, provided they get 100% of the new money and stay the same on what they already have. Sounds like a whole lot of very, very good news has already been priced in, at least through 2009. Doesn't mean it can't keep going up (just look at the tech bubble), but the bigger they are . . .
Just wondering if any of you every click on the ads on Google? I never do and neither do any of my coworkers, unless we do so by accident. I'm surprised there are that many people who allegedly click on these ads.
Exactly, I use google all the time and I've clicked on the ads maybe two or three times over the last few years, my eye has just adapted to actively avoid anything that looks like an ad.
Here are my 2 cents: Goog has Google AdSense program underwhich it pays nicely to its partners- most of them mom-and-pop websites. In order to get better visibility and improved indexing of my website, I came across Goog AdSense and I became their partner. I started displaying Goog ads on my webpages. They do a great job and put perfect ads and guess what? Now I do most of web searches on Goog through my webpages instead of going to www.google.com. Like you and most others, I hardly ever clicked on ads on Google but now I am more inclined to click on the ads because this way, I get paid too. I have found their payouts to be very attractive... My point: There is noticeable conflict of interest for GOOG Ad sense partners and I believe most of them are very generous when it comes to clicking on ads! So my view is- some significant part of Goog's ad revenue is not honest and I believe the advertisers will come to know this sooner or later and would bring down CPM or click through rates on GOOG. (One opportunity: Members of any charitable organization can generate good deal of money for the charity by creating a simple one page website with Goog Ad Sense ads and Good search link. Then do all online searches thro that charity's homepage instead of going directly to www.google.com.) Would be interesting to know how much of the revenue GOOG gets through its homepage and through the ad sense channel. What is the growth rate in both of these channels? Thanks.