Thursday, May 19, 2005

Silicon Valley Watcher: Google Personalized Home Page Launches


Earlier today, my assistant mentioned that I have been quiet about Google lately. I said I am expecting big things in the area of bloggs and RSS feeds soon. We discussed how it would be nice if no one needed to understand what an RSS feed is. We concluded that it will not be long before most folks use a home page that is linked to all of their favorite content.

GOOGLE offered the lab version today! Progress may seem slow but reality is that innovations are coming to market hard and fast. Others have done it before but the Google business model is different. Investors must be aware that rapid innovation from all players in a business can cause cut throat margins and no profits.

As I have reported, my family has purchased Google several times from $85 up to $196 per share. We have not bought any lately. We love the company and we believe the growth this year will blow the doors off the analyst projections. By the same token, we know a battle royal is shaping up between MSFT and GOOG. The coming battle could make all players bleed for a while. AOL is another big firm trying to reconstruct itself around the advertising model.

Google will be one of the big winners. The Google business model is fantastic. It is now estimated that the real estate business will spend more money on internet advertisement than newspaper advertisement within a couple more years. More and more businesses find they get more bang for their advertising dollars on line. Google continues to build market share.

Another huge market, I expect Google to enter before long is the on-line payments market. My family has bought EBAY many times and we added significantly to our position week before last. PayPal is one of the reasons EBAY is among our favorite companies. VISA, American Express and others fight hard and use the banking laws effectively to their advantage but PayPal does billions of transactions and earns a small fee on most. Google pays millions of website owners for the use of advertising space and collects fees from millions of advertisers. Offering a PayPal style account would facilitate these and other transactions.

Google has many irons in the fire. The company wants to do a good job every time. The opportunities that feed off Google's existing product lines are endless. The company just announced a business search engine in cooperation with IBM and the Lotus Notes software. We are in a new phase of growth for the internet. This is the phase where the light goes on for millions of people. More and more businesses and individuals will see or even invent ways to use the power available.

I have not checked the short interest ratios but I suspect there are plenty of folks who shorted GOOG after the last earnings announcement and sharp rise in the stock. The past couple of weeks, the heat has been going up gradually. The sock goes up a few points most days. The short sellers must be feeling steam around their ears by now. GO! GOOGLE GO!