Four months after IPO, Google’s stock has soared, the company is selling scads of online ads-and its bosses realize it has to grow up fast.
Jon Gales loves Google but not for the reason you might think. It’s a terrific search engine, sure, but what Gales really likes is that google is making him money. Gales’s website, Mobiletracker.net, is a compendium of news and reviews about cellphones that after a year and a half attracts about 200,000 users a month. Google supplies the ads for the site, visitors click on the ads, and because of the site’s popularity, google sends Gales monthly checks of $5,000 or more. That’s a decent chunk of change for any sole proprietor. But for Gales, the numbers are eye-popping. He’s only 19 and lives expense-free at home with his parents in Tampa, posting four or five items in the course of the day while parked on the living room couch with his laptop. Says Gales: “If things keep going the way they are going, I’ll be making more money than my dad next year.”
Google is making money for lots of people these days, whether they’re tiny website entrepreneurs, giant corporation like the New York Time Co., or the legions of shareholders who have seen Google’s stock price roughly double in less than four months. (It was trading around $175 as this issue went to press, but $156 is around number many analysts have used in valuation models-and a level the volatile shares have yet to dip below in recent week.) From its humble beginnings in Larry Page’s and Sergey Brin’s Stanford dorm room six years ago, the company has become ehe latest mecca for clever engineers and a $2-billion-a-year growth machine.
Last quarter Google’s Ebitda, Wall Street’s proxy for operating income, totaled $321 million, vs. $322 million for nine-year-old eBay, $260 million for ten-year-old Yahoo, and $114 million for nine-year-old Amazon. Google is much smaller tha those fellow dot-coms but is growing faster. Its sales and Ebitda each doumargin last years and the year before that. Google’s operating profit margin, at more than 60%, is bigger even than Microsoft’s at its peak. (source: FORTUNE MAGAZINE)
WHY ARE THEY AFRAID OF GOOGLE?
SEMEL
Yahoo’s CEO knows that capturing loyal viewers is the key to any web portal. Search and e-mail, Google specialties, are the foundation of that strategy.
BEZOS
Amazon lets you what to buy on the web quickly, easily, and cheaply. Google wants to organize the web’s information so that it’s easy to find and buy stuff. Same thing. No?
GATES
Microsoft controls the PC and its most important applications. But the web is the platform of the future, where google reigns supreme and Microsoft is still and also-ran.
WHITMAN
It’s often cheaper and faster for a store to advertise on Google and bring customers directly to its website to complete a sale than to pay eBay to run an auction.
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