Why is Perez Hilton not on there? Can the 'man' get no credit!

Is it just my eyes or is the purple slice getting smaller and smaller and smaller by the second.

If you have to have a line pointing from your name to your share, you may be in trouble.

packman stole rufus' coat!

Let me guess: You generated that chart using Google Apps.

Who's EW Scripps? Sounds like a guy with a big bushy white moustache who spins humorous yarns about Americana on NPR

Where is SLCO????!!

Also, pretty impressive that Walt Disney can command such media control from his frozen sarcophagus.

Whither thou, LOLCait empire?

Umm... I'm not seeing NBC-Universal. Seems like a big one to leave out...right?

Hey Nick - I'm going to take your copy of Excel or whatever hippy freeware alternative you're using away if you do this again.

You pulled the wrong conclusion from the wrong set of data for the wrong reasons. First of all, this is like saying that a bettor's spread determines the better football team. All market cap does is measure the total common shareholder's equity in the firm, which only reflects how investors feel about a company. That is not the same as something like a multiple, EPS, PE, or other form of analysis that actually captures revenues or profitability. And even then I'd say you're far from "proof" that would get PR folks out in droves.

Also, you've done nothing to prove the central conceit of your thesis - that Google and News Corp are in the same industry. Are they? If so, you'd likely see negative correlations between their market share movements over time as one group of companies fell out of favor for new ones. Do you? Didn't think to check that? And keep in mind, when you do check this later, you'd have to eliminate the component of any correlation related to general market performance, somehow separating the general impact of markets from the change of capital movement from the old media companies to what you're arguing is a new media company. You'd also have to tease out the impact of, say, a recession on TV-watching. Viacom has been ticking up for weeks because recessions = people who are unemployed or unable to afford going out = eyeballs at home on the TV.

I'd help you there, but that's when I start charging.

For anyone who doesn't want to read the big screed:

This argument is insultingly limited and scarcely supported. Skip it.

@TheDismalScience: whoa.

@TheDismalScience: Go back to the football spread thing - I need betting tips for the Super Bowl.

@PimpMyCouch:

There's really only one form of advice I can offer:

They're not paying a justifiable risk premium. That's why they make money. Therefore, don't bet anything more than you would willingly burn.

@TheDismalScience: Are Google and NewsCorp in the same business? If not now, they will be very shortly, whenever Google decides to muscle in on the content business.

Google is a new kind of monopoly in a new kind of world: a world in which the boundaries between horizontals are so blurred that avoidance of antitrust regulation is easy. Should media companies be scared of Google? Damn straight they should be. Google is going to put them out of business in short order.

Though, to be fair, they owe their inevitable demise as much to their own failings as to Google's aggressive designs. The big media companies have screwed the pooch almost as many times as Google has made the right move. Perhaps even more often. While the antitruster in me sees the unchecked rise of Google as a force of questionable ethical and business value, the bitter ex-Hollywoodite in me won't shed a tear for the bodies about to fall.

@TheDismalScience: I'm no dismal scientist, but it's fairly legit, if a little crude, to compare companies based on their market caps. Isn't share price just basically the market's best guess at how much money these companies are ever going to make expressed in today's dollars? Whether Google and the other companies are actually competing in the same space seems like a fairer criticism.

@Furious_George: ...continued...

What concerns me most about Google isn't its affect on established conglomerates, but rather, its monopolistic ability to buy out or outcompete all startups in the Internet space (and beyond). As things currently stand, there will never be another Google -- precisely because the current Google has grown so powerful as to prevent this from ever being possible. It's like a tree that has grown so large as to block out the sun, preventing all young growth from reaching maturity.

Inasmuch as Google is an anticompetitive and monopolistic force in the digital world, and inasmuch as the prevention of startup success is bad for the American economy, I think Google is a negative force in the business world. It can kill all the giants it wants, and I won't cry. But its effect on the little guys and gals needs to be reined in.

@Furious_George: "...isn't its affect on..."

Should be "effect." Fuck me.

@Furious_George:

This stock is trading at almost 40 times current earnings - using market cap to reflect anything other than wild speculation is just irresponsible.

The reason it's trading at 40 times earnings is because guys like you are putting the cart way before the horse. Plus, all of your assertions are just so wild:

Google's shown no ability to compete on a content basis; they exist to monetize content. Their only successful business is acting as a distribution system for content that they don't own. They haven't shown an ability to own content, or even an interest, which is actually a huge risk that has been sending shares lower.

Google is not a monopoly, either. At all.

@TheDismalScience:

"This stock is trading at almost 40 times current earnings - using market cap to reflect anything other than wild speculation is just irresponsible."

I haven't referenced market cap once so far, so please don't put words into my mouth.

"They haven't shown an ability to own content, or even an interest, which is actually a huge risk that has been sending shares lower."

No interest or ability? I suppose their acquisition of YouTube means nothing to you? Or their acquisitions of sundry advertising agencies? Or their many press releases announcing the intent -- if not yet the actual design -- to start a production studio/entity?

Google is eying content very hungrily, and they have the buying power to acquire their way in the door if they decide they don't want to build their own entryway.

@lawyergay:

Right.

But given the extreme and unprecedented speculation built into Google's market cap, I find the argument to be crude to the extent of flat wrong. Your mileage may vary.

@Furious_George:

With the market cap stuff, I was just trying to express the extent

You failed to fully understand what I was saying.

They've purchased a content distribution model - YouTube. Their core business, search, is predicated on the concept of a variety of content to search through.

They've been advertising as the owner of the distribution network for content. However, they have minimal control over the content itself. They have expressed no interest in licensing a YouTube video for example - just showing it. Google is a portal, not a studio or production organ.

@TheDismalScience: I tend to agree with you, but as some dink once said, "The market can stay irrational longer than you can stay solvent." The relatively rational Barron's has been calling Google overpriced ever since it hit about $360 a share. It's as if all the hopes and dreams of the dot-com era have been poured into this one company.

@TheDismalScience: I haven't failed to fully understand anything you're saying. I get what you're saying, and by extension, what you're implying: why should Google bother with content when it's a) not their core competency, and b) not at all (in your estimation) in line with that core competency?

My argument is that, to the contrary, content is the next logical horizontal for them to leap into, and they're also trying very actively to make that leap.

What bothers me about Google isn't its desire to enter or not enter content. What bothers me about Google is its unassailable reach (via buying power), its "infrastructure" and attendant ability to do pretty much anything it wants in any sector it wants, and its demonstrated anticompetitive philosophy (buying out any who might one day compete).

Google has a monopoly on the content "portal" you've described, and is now taking steps to produce or acquire the content to fill that portal. I suppose that's where you and I disagree: you don't seem to think Google wants to own its content, and I see a pattern of buyouts and a series of press releases announcing just such an intention.

Whether or not the company's stock is in line with its fundamentals is a different discussion altogether.

BUSINESS ARE SERIOUS INTERNETS

Gawks, you should bring back the Helpful Critter award.
I hereby nominate Dismal Science!

@Furious_George:

They do not have a monopoly on internet search or internet video. They have a cultural monopoly. That's something altogether difference. But I, a rational consumer, can elect to get my internet video or search from myriad other sources.

With respect to content itself, they have 0 track record. I hesitate to award them buckets of assumed future growth dollars on that basis. Couple that with the obvious irrationality of their market capitalization and you have a very poorly-valued stock. Abstracting the flawed argument of the marketplace further with this chart is just...well, it's sure not smart.

Mr. Denton: I think TheDismalScience needs a column of his own, or a point-counterpoint with either lawyergay or Furious_George.

@TheDismalScience: I haven't really addressed their market cap or stock value, as I know you know, but I agree with you on that point. I think there's a lot of speculation and hot air built into Google's stock price, even after its recent deflation. When it comes to Google, even the most intelligent analysts seem to throw caution to the wind and assume the company is some sort of perpetual motion machine. "I don't quite understand how, but I just know Google's stock will grow indefinitely!" seems to be the mindset that has both inflated its price beyond $300 (and well into the $700s until recently) and will continue to prompt people to buy Google stock for the foreseeable future. It is a company whose fundamentals and stock price are entirely divorced of one another.

That said, I do think Google holds an unfair/anticompetitive position within the marketplace. Not because of its market cap, but because of its (admittedly shrewd) coopting of internet search, its (again, shrewd) positioning of itself as the de facto Internet-within-the-Internet, and its buying power. It's a tough nut to crack, because yes, if you follow the letter of the law, it's not really a monopoly per se. But then, we sort of have to look at the spirit of the law. Google is now large, rich, and powerful enough to prevent any competition in any internet-related field it seeks to occupy. It's essentially sitting on a potential monopoly over the entire internet -- a monopoly that can be exercised at will, at any time, and for any reason. But since we can't police potential, we can't really do much about it.

@TheDismalScience: I also agree that the pie chart is kind of silly, and I'm not sure what point it was trotted out to illustrate.

@CaptainFantastic: I'd read it.

href="#c3967377">Furious_George:

That's the interesting power of the internet, though. I don't think there is enough capital in the world to monopolize the internet.

One of the great risks to Google is that eventually, the need for search disappears. Don't laugh - the internet experience of most users distills from a wide search-biased quest for relevant sources of information to a narrow perusal of a few very specific sources. I, honestly, rarely search the internet. Most of my targetable ad time is spent reading content at predetermined locations.

Once those locations realize that their intellectual property - and not Google's provision of access - is the true engine of internet use, they'll demand more ownership of the ad revenue. I think that's a long term profit risk for Google, because its attempt to use its search popularity to shunt people into their proprietary pieces (primarily applications) of the internet have not been consistently successful. They, as I said, have 0 track record here.

We'll see, right? I think the company's at a real crossroads. Its lack of ability to diversify revenue streams has most people painting them as very vulnerable to a recession, in which ad dollars typically contract. Since the last few earnings reports seem to support a slowdown in their incendiary growth, it may be that they're even more vulnerable than previously assumed. Hard to keep up a 38X PE ratio when you're not blowing the doors off every quarter anymore...

@TheDismalScience: "We'll see, right? I think the company's at a real crossroads. Its lack of ability to diversify revenue streams has most people painting them as very vulnerable to a recession, in which ad dollars typically contract. Since the last few earnings reports seem to support a slowdown in their incendiary growth, it may be that they're even more vulnerable than previously assumed. Hard to keep up a 38X PE ratio when you're not blowing the doors off every quarter anymore.."

I agree completely, which is why I'm not presently invested in Google. Despite how sexy it's been, and how great it's been to those who got in early, I just can't bring myself to invest in a company whose 5-year business plan seems capricious-to-nonexistant. I think Google's strategy right now relies way too heavily on Google as a brand, and on the inevitability of search as a growth business. We've seen that search is not necessarily, in and of itself, an engine of perpetual growth. If anything, the glory days of search are over, and we're now seeing segmentation -- not broad aggregation -- as the driving force behind the internet (if not culture in general).

Still, Google has all the tools to maintain its dominance via endless M&A of any innovators in any up-and-coming internet space. What's both troubling and awe-inspiring about Google is that everyone else seems to be buying into the Google mythology. We're seeing startups rise to prominence with the end-goal not of ousting Google, but of capitulating to Google. The IPO-as-endgame has been effectively replaced with the buyout-by-Google-as-endgame. The moment of truth for Google will come whenever startups, disruptors, and innovators decide they don't need Google -- whenever they realize that it is the most pristine, awe-inspiring, and imposing Potemkin village ever built, but that it's still just a Potemkin village.

The reason I am troubled by Google, even despite these hazy forebodings for its longterm future, is that there will never be another segment of the internet market broad enough to be a "Google." Even Facebook, fast-declining darling of 2007, would never have become as big as a Google, even if everything went 100% to plan. Search will always be just about the broadest and most conceivably profitable business imaginable on the net. (At least until, as you say, the business collapses; personally speaking, I don't see that happening anytime soon). Inasmuch as there will never be an opening for a new Google, there will never be a company capable of outcompeting Google if Google decides to enter into competition with that company.

In other words, the entire startup market is at the mercy of Google's competency. The only way to slip into Google-style prominence is if Google fucks up catastrophically and fails to buy out or out-develop you as you grow. If Google fails to notice you, you have a chance. But if Google notices you, they have the muscle to put an end to you.

Again, we can't police Google's potential, Google's intentions, or Google's (presumed) future actions. Which is troubling, because a perfectly run Google will never allow significant competition to enter the market. I'd hardly call today's Google perfectly run, but it seems run well enough to have cut quite a few pretenders to the throne off at the pass.

summary: the market is perception, not reality. thanks a bunch, guys! i've made a buuundle on google. however they've done it. great debate among the best and the brightest,though. so thanks. i'll read it tomorrow, sans scotch. any analysis on the potential for a giants' victory on sunday evening?

@TheDismalScience: @Furious_George: Both of you have/are in the process of obtaining your MBA/CFA/Math degree. My advice is to save the energy for the degree/exam/board meeting. I can't think of a more inappropriate venue to spout about/debate on these topics than Gawker. You are both clearly very sharp/jaded/in the wrong line of work. So unless you're going to ease up and discuss Julia Allison/The Waverly Inn/Open Captions, I'm not sure why you are loitering/stomaching this web site.

@fiveinchtaint: To the contrary, I think there are a lot of very bright people on Gawker -- and I'd certainly count TheDismalScience and yourself among them -- and I enjoy in-depth discussions with very bright people. Believe it or not, such discussions are extremely hard to come by on the internet. I think you give the population here too little credit.

@Furious_George: Heh. You're still out there lurching. But you are west coast so I guess that's normal. I actually really enjoyed the discussion you two had today. I followed it but I tread lightly on topics in which I'm familiar because I fear being outed for killing time here when I become a captain of industry. You are no doubt familiar with the outcome of the Whole Foods exec's foray into website commenting. Anyway, my previous comment was meant as a light hearted jab at two intellects who I knew could buffet the offensive. It was merely an attempt to pull you both back into the frey after market hours.

@fiveinchtaint: "You are no doubt familiar with the outcome of the Whole Foods exec's foray into website commenting."

Hmmm... Suddenly I'm tempted to browse your posting history for evidence of brand shilling!

Hey, so Google's earnings miss today just erased approximately 16B in shareholder value in after-hours trading. That's almost the size of CBS!

Am I done winning this argument yet?