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Google’s market capitalization makes it worth more than the rest of the Big Web combined! Here are some rough calculations and ball-park figures:



SUMMARY

Company

Revenue ($B)

Earnings ($B)

P/E

Market Cap ($B)

Google

14.0

4.00

54

216

 

 

 

 

 

eBay

7.6

0.14

366

50

Yahoo

5.1

0.67

61

42

Amazon

14.5

0.36

102

37

MySpace

0.6

0.12

133

16

Facebook

0.2

0.05

319

15

Microsoft Online

0.9

-1.0

10

SubTotal

28.9

<0.34

>500

170



BREAKDOWN

Google

eBay

  • $7.6b revenue
  • $137m earnings
  • $50b market capitalization
  • P/E ratio of 366x

Yahoo

  • $5.1b revenue
  • $670m earnings
  • $42b market capitalization
  • P/E ratio of 61x

Amazon

  • $14.5b revenue
  • $363m earnings
  • $37b market capitalization
  • P/E ratio of 102x

MySpace

Facebook

Microsoft Online Division



CONCLUSION

Is Google really worth more than all the rest of the Web giants? If you look at the numbers above, you can see that Google is able to keep their earning power high in proportion to their revenue. This shows that Google is operating at an extremely, high-efficiency. Earnings are what matter and Google is making real money. Google has no debt, over $13b in cash and marketable securities, and total assets worth over $23b. This isn’t just pie-in-the-sky valuation, they are for real.

In addition, while Google’s P/E ratio is high it is still lower than the rest of the group (many of which are in the stratosphere). Even if you take out the money-losing Microsoft Online from the list above, the average P/E ratio for the group would still be greater than 119. To put this in perspective, if these companies had, instead, the same Google P/E ratio of 54x, their adjusted market capitalizations would be:

  • eBay $7.5b
  • Yahoo $36.1b
  • Amazon $19.4b
  • MySpace $6.5b
  • Facebook $2.5b?

Currently, it looks as if Yahoo is firmly in second-place behind Google. However, MySpace and Facebook valuations are difficult to quantify due to rapidly expanding revenue streams and improving efficiencies. Facebook, in particular, may move up quickly in the list, as they recently launched their social advertising platform, which will compete directly with Google AdWords and AdSense. However, with current valuations, Facebook is priced high in the ionosphere.

By indexing the Web, and everything else, Google has put itself in a good position. Are they really worth more than all the other big player combined? Right now, in my opinion, the answer is definitely “yes.” What do you think?