GOOG and Others Trade at 19-44x (Inflated) Cash Flow !!
Stock Price 2005 EPS P/E ratio 2005 cash flow Price/CF
Yahoo $28.75 47c 61x $1.4 bln 27.7 x
eBay $79.49 $1.59 50x $1.8 bln 44 x
Amazon $39.06 $1.36 29x $857 mln 19 x
Google $100 ? $2.37 42x $1.4 bln 19 x
Source: Thomson Financial/American Technology Research
Can't believe there are that many stupid people out there who would bid for GOOG at these valuations !
8-11 : Bear Reports (YHOO) Reit Peer Perform
Yahoo resolved two lawsuits against Google for an Overture patent infringement and inadequate receipt of shares from warrants related to a 6/00 service agreement. To settle both issues, Yahoo received 2.7m of GOOG shares. In exchange, Yahoo agreed to drop the patent infringement case and instead agreed that Google can pay to license Overture patents. Both companies also dropped the warrant issue.
Schwab Not Impressed -(YHOO) Reit Neutral
The 2Q earnings parade for the Internet sector is nearly over, with most companies reporting in-line or disappointing results. In this analysis, we make the case that the deceleration in growth of Internet commerce and online media are linked. Our new 3Q estimates for Yahoo search revenues have been trimmed to flat with 2Q levels. We now project net revenues of $620 million, toward the low end of the guided range, and well below consensus. We remain Neutral on YHOO, with a $31 target. Reducing Estimates for Yahoo Search in 3Q: We now expect that search revenues for Yahoo will be flat on a sequential basis in 3Q, and that branded advertising will be up only slightly, if at all. We have reduced our 3Q revenue, EBITDA, and EPS estimates for Yahoo, to come in toward the low end of the Yahoo guidance. Consensus expectations, by contrast, remain toward the high end of the guided range.
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