Good news: Google and Ebay make tons of money. Bad news: they throw it away! April 20, 2007Posted by deminvest in ebay, goog, growth stock, Internet stocks, investment, nasdaq, Nasdaq stock, Single stocks, stock I own, stocks.
Good news: Google and Ebay making tons of money. Bad news: they don’t know how to spend, so they throw it away on junk buys!
Yes fellow proletarian investors, Google and Ebay, the smartest of the geniuses, are making the same mistakes that you and I would make if we found the way to win the lottery every week or if we had a moneymaking magic box.
What would we do if we had a huge flow of dollars? I mean ten times more than we can use, so much that we could buy everything we always wanted, we could help everybody we know, we could donate to every charity we know and we would still have too much to spend!
We would definitely buy a lot of expensive useless stuff. Stuff extremely expensive of very little use for us, several Ferraris, several houses in cool places, private jet, yachts…
This is the problem with Google and Ebay. They beated again analysts expectations, they made so much money, that they started wasting it.
Yes Google purchasing Doubleclick for $3.1 billion is an outrageous waste of money. Doubleclick is a looser. It has been buried long ago by Google itself. Why pay such a loser 10 times its 2006 Earnings?
DoubleClick’s 2006 revenue is estimated at $300 million.In 2004 its revenue was $302 million. 2003 revenue was $271 million. 2002 revenue was $300 million (here my source).
My answer? Because Google doen’t know how to throw away all the cash it makes.
And Youtube? Google spent billions in a company that so far only has expenses, and big ones.
And Ebay? I was puzzled when I saw Ebay stock was going down before and right after announcing great earning. Then I fond out there are rumors that Ebay is about to buy an expensive junk toy with a prophetic name: stumbleupon.
They bought Skype for 3 billions. It is useless for Ebay, it has minimal earnings, but at least Skype is cool. A cool bright toy… I remember the childish excuse for Ebay to buy Skype: “So people can talk to sellers while the bid”. I know many people who talk with skype (I do too), I also know many who buy or sell on Ebay, yet nobody ever told me of the combined use.
Google and Ebay are great companies:
Google’s first-quarterprofits surged 68.8% up to $1.0 billion ($3.18 a share) from $592.3 million ($1.95 a share)for the year ago period. The company earned $3.68 a share on a continuing operations basis, topping the Street’s expectation of $3.30 a share.
Ebay’s first-quarter profit surged 52%, up to $377.2 million, (27 cents a share) from $248.3 million (17 cents a share) a year earlier.
Still both Internet giants are bargains, but I wish they used all that cash like the should: trough buybacks or dividends, they should benefit us, the poeple of shareholders, not some kids who like videos on-line, tubes and stumbling.