A new powerhouse in the Silicon Valley
Like Guillaume mentioned in his blog, Google is adding instant messaging with VOIP features to its large range of products. However, some people in the Silicon Valley are starting to complain about the increasing power of Google, making it difficult for the others to raise money, recruit talents or simply innovate. They are even comparing Google to Microsoft! That must be hard to swallow for some of the engineers working there. The increased competition for talent in the high tech industry is also lifting the salaries up by 25% to 50%. May be it was not the right time to leave this industry to go to business school...
Internet and high tech companies are clearly getting some good valuations today with transactions such as Murdoch buying Intermix (parent company of MySpace) for $580m a few weeks ago, the IPO of PartyGaming on the LSE for $9bn, the IPO of baidu.com (Chinese search engine) on the Nasdaq or Yahoo! buying a stake in alibaba.com (Chinese again) for$1bn . Could this be a new bubble? I don't really know and in any case I cannot really buy any stock since I still haven't recovered from my losses from the last bubble. Yet I would be careful with stocks such as Google which are probably a bit overvalued now and it's actually not so surprising to see the company selling some additional shares for $4bn: the owners could very well believe that at $280 a share, this is the correct price.
Internet and high tech companies are clearly getting some good valuations today with transactions such as Murdoch buying Intermix (parent company of MySpace) for $580m a few weeks ago, the IPO of PartyGaming on the LSE for $9bn, the IPO of baidu.com (Chinese search engine) on the Nasdaq or Yahoo! buying a stake in alibaba.com (Chinese again) for$1bn . Could this be a new bubble? I don't really know and in any case I cannot really buy any stock since I still haven't recovered from my losses from the last bubble. Yet I would be careful with stocks such as Google which are probably a bit overvalued now and it's actually not so surprising to see the company selling some additional shares for $4bn: the owners could very well believe that at $280 a share, this is the correct price.
posted by k at 10:51 AM
4 Comments:
Hmmm Dr. Karibu, could we have the rational behind your valuation of Google stock? ;)
Seriously, I think there is a (small?) polarised (rational?) bubble: a lot of money for excellent* companies, engineers, VCs, projects...
*: excellent as judged by the global tech community.
Selling dog food as a pure player is still not in the party line.
G.
PS- when are you going to do your coming out as an tech entrepreneur?
well not really a detailled DCF analysis if you want to know but simply common sense: trees don't grow to the sky!
but like I said, I've burned myself pretty hard during the first bubble so I'm not the best financial advisor you can find
i doubt a bubble is in the formation just yet. indeed there's a lot of activity in silicon valley and other tech hotspots, but a bubble will need to force of a mad rush(when people in the stock markets and elsewhere) cant think of anything else but this. also many people out there burnt themselves in the first bubble, so i would expect a little caution - though i know that its a lot about people sentiments and fragrance in the air when it comes to stocks. one never knows when he is led in the wrong direction.
Looks like Google is a pretty big deal - it is attracting the attention of MBAs around the world(the techies are anyway fascinated).
Teasing you...
Next Google product?
Importance of RSS
G.
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