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Stock Boom: Google, News Corp., Yahoo-Three Months Later

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October 11, 2007

Posted by neillevine

About This Editor: I am a writer. Have been writing for other sites, but expect to do most of my future work HERE! My expertise extends from the esoteric such as burning hydrogen to the unpredictability of the stock market and my writing makes me a jack of all trades and exasperated master of none. I have had some influence over national wildfire and water policy and there are hints of a change in energy policy, BUT as Samuel Goldwyn once said, "A verbal promise is not worth the paper it is written on."

         

At 14,000, the Dow Jones Industrial Average is essentially higher than it has ever been before, translating into many, but not all, investors making money. The same holds true for Google, GOOG, which is selling for more than $600 a share, again meaning a lot of people are making money in this stock market.

If the national and world economies keep growing, it is reasonable to expect the Dow to go higher, although a cautious investor has to worry about the twin specters of excessive speculation, or “irrational exuberance” as Alan Greenspan, the retired former Fed Chairman characterized that type of thinking, and the possibility of big bumps in the road, or an economic slow down, as those things are usually called. Either worse case scenario could possibly crop up in the future but neither being guaranteed and neither actually being particularly good for anyone nor good for anything.

In the case of Google, a couple of months ago I brazenly predicted it would head for $700 a share, but emphasized that I was talking about two years in the future.  Well, I have been thinking about how well this stock has performed thus far and decided to check on what the Wall Street analyst’s who cover the company were saying.  The story is basically that they expect something more than $15 a share in earnings for the fiscal year that ends December, 2007 and $19 a share for the next fiscal year. $600 is about 40 times the projected current fiscal year earnings, making the stock price somewhat risky unless the company really hits its numbers.

Google will be issuing its quarterly financial numbers shortly and I would expect its financial statement to be examined with a finely lit microscope.  Keep in mind that the stock has been rising steadily once it passed $500 as opposed to the bouncing up ad down in the $450 to $500 range that went on for what seemed like a pretty long time.

On the other hand, I am highly impressed with what News Corp.’s, NEWS A, expects to do with  Wall Street Journal resources for the benefit of its new Fox Business channel. News Corp, is also going to convert its Wall Street Journal web site from a subscription model to an advertiser supported paradigm following in the financial footsteps of its ownership of Myspace.

Along this line, a News Corp. Newspaper, The New York Post, has given a nudge to rumors that perhaps Yahoo would benefit from some sort of link up between the News Corp. properties and the Yahoo search business.  Should this happen I would expect both stocks to trade very actively and head for the $40 range over the course of time.

Minting more internet money for those sharp enough to figure out where the business is headed.

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