Filed under: Google (GOOG), Microsoft (MSFT)

As I posted this morning, there was a face-off between Google Inc. (NASDAQ: GOOG) and Microsoft Corp. (NASDAQ: MSFT) for a stake in Facebook. This afternoon, according to the New York Times, Microsoft won.

Specifically, Microsoft paid $240 million for a 1.6% stake in Facebook. This values Facebook’s equity at $15 billion — that’s $100 for every one of the $150 million in revenue it’s expected to generate in 2007. CEO and Harvard dropout Mark Zuckerberg’s 20% stake is now worth $3 billion.

But the really stunning thing about Facebook’s valuation is how it compares to Microsoft’s and Google’s. Specifically, $1 of Facebook’s sales is worth 7.1 times more than a dollar of Google’s — whose Price/Sales (P/S) ratio is 14.1 — and 17.5 times that of Microsoft which sports a P/S ratio of 5.7.

The beauty of private company math is that even though Facebook can’t really be worth that much, the bidding between these two powerhouses makes it so. And it looks like the old school Harvard ties paid off (that’s where Gates dropped out and Ballmer graduated). And whether Microsoft earns any revenue on its advertising deal, I’d be willing to bet that Microsoft’s 1.6% stake will more than double today’s $240 million when Facebook goes public.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Google or Microsoft.

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Filed under: Google (GOOG), Microsoft (MSFT)

As I posted this morning, there was a face-off between Google Inc. (NASDAQ: GOOG) and Microsoft Corp. (NASDAQ: MSFT) for a stake in Facebook. This afternoon, according to the New York Times, Microsoft won.

Specifically, Microsoft paid $240 million for a 1.6% stake in Facebook. This values Facebook’s equity at $15 billion — that’s $100 for every one of the $150 million in revenue it’s expected to generate in 2007. CEO and Harvard dropout Mark Zuckerberg’s 20% stake is now worth $3 billion.

But the really stunning thing about Facebook’s valuation is how it compares to Microsoft’s and Google’s. Specifically, $1 of Facebook’s sales is worth 7.1 times more than a dollar of Google’s — whose Price/Sales (P/S) ratio is 14.1 — and 17.5 times that of Microsoft which sports a P/S ratio of 5.7.

The beauty of private company math is that even though Facebook can’t really be worth that much, the bidding between these two powerhouses makes it so. And it looks like the old school Harvard ties paid off (that’s where Gates dropped out and Ballmer graduated). And whether Microsoft earns any revenue on its advertising deal, I’d be willing to bet that Microsoft’s 1.6% stake will more than double today’s $240 million when Facebook goes public.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Google or Microsoft.

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Filed under: Google (GOOG), Microsoft (MSFT)

Microsoft Corp. (NASDAQ: MSFT) ended up owning. 1.6% of Facebook, the second largest social network. The investment of $240 million values the private company at $15 billion.

The Wall Street Journal writes that “the Microsoft agreement comes after intense lobbying by Microsoft and Google (NASDAQ: GOOG) for Facebook’s hand. In recent weeks, executives including Microsoft Chief Executive Steve Ballmer have courted the three-year-old Palo Alto, Calif., company.”

Descriptions of the deal indicate that it focuses on helping Facebook to expand overseas with Microsoft supplying support by selling display advertising in the new markets.

But exactly what the world’s largest software company gets for its money is a little unclear. It does keep Facebook out of the hands of Google.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Google (GOOG), Microsoft (MSFT)

Microsoft Corp. (NASDAQ: MSFT) ended up owning. 1.6% of Facebook, the second largest social network. The investment of $240 million values the private company at $15 billion.

The Wall Street Journal writes that “the Microsoft agreement comes after intense lobbying by Microsoft and Google (NASDAQ: GOOG) for Facebook’s hand. In recent weeks, executives including Microsoft Chief Executive Steve Ballmer have courted the three-year-old Palo Alto, Calif., company.”

Descriptions of the deal indicate that it focuses on helping Facebook to expand overseas with Microsoft supplying support by selling display advertising in the new markets.

But exactly what the world’s largest software company gets for its money is a little unclear. It does keep Facebook out of the hands of Google.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Google (GOOG), Microsoft (MSFT)

As I posted this morning, there was a face-off between Google Inc. (NASDAQ: GOOG) and Microsoft Corp. (NASDAQ: MSFT) for a stake in Facebook. This afternoon, according to the New York Times, Microsoft won.

Specifically, Microsoft paid $240 million for a 1.6% stake in Facebook. This values Facebook’s equity at $15 billion — that’s $100 for every one of the $150 million in revenue it’s expected to generate in 2007. CEO and Harvard dropout Mark Zuckerberg’s 20% stake is now worth $3 billion.

But the really stunning thing about Facebook’s valuation is how it compares to Microsoft’s and Google’s. Specifically, $1 of Facebook’s sales is worth 7.1 times more than a dollar of Google’s — whose Price/Sales (P/S) ratio is 14.1 — and 17.5 times that of Microsoft which sports a P/S ratio of 5.7.

The beauty of private company math is that even though Facebook can’t really be worth that much, the bidding between these two powerhouses makes it so. And it looks like the old school Harvard ties paid off (that’s where Gates dropped out and Ballmer graduated). And whether Microsoft earns any revenue on its advertising deal, I’d be willing to bet that Microsoft’s 1.6% stake will more than double today’s $240 million when Facebook goes public.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Google or Microsoft.

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Filed under: Earnings reports, Google (GOOG), Apple Inc (AAPL), Amazon.com (AMZN), iPhone, Stocks to Buy

Amazon.com (NASDAQ: AMZN) reported its third-quarter results yesterday and they were excellent. The stock is down $15 today so far to $85 as Amazon did not hit the “whisper number” that was circulating about the Street. Analysts were at $0.18 EPS, Amazon reported $0.19, but the “whisper” was at $0.21-$0.22. So, what do we do now? Simple, kill the name!! Then go back and buy Amazon and make it a core holding.

Amazon is a unique and interesting story, not to mention a category killer. No one can touch Amazon, and the proof has been shown with the shares tripling from $32 to $101 over the past 52 weeks. The so-called value guys who do not understand growth investing will pooh-pooh Amazon and give you the old “I told you so,” as the shares are down $15 today from the $101 high. Value guys, take your victory lap, then get out of the way so you don’t get run over. Oh, by the way, these are the guys that have been negative on Apple (NASDAQ: AAPL) since it was at $50 (now at $185) and Google (NASDAQ: GOOG) at $150 (now at $665).

Amazon, Apple and Google should be core portfolio holdings for any individual investor — heck, it’s a core holding in most growth mutual funds. So what do they know that the naysayers and purveyors of doom and gloom don’t know? It’s called dominance — category killer. Try and replicate any one of these three companies … Impossible, OK, almost impossible!!

Category killers have massive and growing market shares in their respective niches. Amazon has built up an infrastructure that cannot be touched. Amazon has a customer list growing like a weed that is worth its weight in gold. I have two books on Amazon and I can tell you, they service authors and customers superbly. Amazon has the industry covered like no one else can. Game, set and match.

Apple is THE consumer electronic giant and it’s a global dominance story. iPod, iPhone, Mac and many other Apple products own their respective space. With category killer status comes margins: the ultimate barometer. Many value guys just don’t get that fact — he who owns the market share arena, controls the pricing and therefore the rich margins. Apple’s visibility for the next four quarters is absolutely salivating … once again, surprise, surprise, forward numbers will go up again, as they have after the last seven quarterly reports!!

Google’s world is so large that it’s almost immeasurable. How do you quantify the search engine game? The advertising/marketing game? Very tough, but we do know Google owns it and sets the pricing. Google may be the most relevant company of this generation. I have said it before, like since the IPO, and have been laughed at and accused of Kool-Aid drinking. My response is, it tastes great!!

So Amazon is down $15 from its tripled price. Buy it folks, put it away and let the asset grow. Sure the three names all reported superb numbers, but more importantly, they reported great prospects going forward. This has been the case every quarter for the past couple of years.

Value guys, get used to it. The PE’s of these three will not be cheap; if they were I would not want to own them anyways.

Georges Yared is the CIO of Yared Investment Research and the author of Baby Boomer Investing…Where do we go from here?

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Filed under: Earnings reports, Google (GOOG), Apple Inc (AAPL), Amazon.com (AMZN), iPhone, Stocks to Buy

Amazon.com (NASDAQ: AMZN) reported its third-quarter results yesterday and they were excellent. The stock is down $15 today so far to $85 as Amazon did not hit the “whisper number” that was circulating about the Street. Analysts were at $0.18 EPS, Amazon reported $0.19, but the “whisper” was at $0.21-$0.22. So, what do we do now? Simple, kill the name!! Then go back and buy Amazon and make it a core holding.

Amazon is a unique and interesting story, not to mention a category killer. No one can touch Amazon, and the proof has been shown with the shares tripling from $32 to $101 over the past 52 weeks. The so-called value guys who do not understand growth investing will pooh-pooh Amazon and give you the old “I told you so,” as the shares are down $15 today from the $101 high. Value guys, take your victory lap, then get out of the way so you don’t get run over. Oh, by the way, these are the guys that have been negative on Apple (NASDAQ: AAPL) since it was at $50 (now at $185) and Google (NASDAQ: GOOG) at $150 (now at $665).

Amazon, Apple and Google should be core portfolio holdings for any individual investor — heck, it’s a core holding in most growth mutual funds. So what do they know that the naysayers and purveyors of doom and gloom don’t know? It’s called dominance — category killer. Try and replicate any one of these three companies … Impossible, OK, almost impossible!!

Category killers have massive and growing market shares in their respective niches. Amazon has built up an infrastructure that cannot be touched. Amazon has a customer list growing like a weed that is worth its weight in gold. I have two books on Amazon and I can tell you, they service authors and customers superbly. Amazon has the industry covered like no one else can. Game, set and match.

Apple is THE consumer electronic giant and it’s a global dominance story. iPod, iPhone, Mac and many other Apple products own their respective space. With category killer status comes margins: the ultimate barometer. Many value guys just don’t get that fact — he who owns the market share arena, controls the pricing and therefore the rich margins. Apple’s visibility for the next four quarters is absolutely salivating … once again, surprise, surprise, forward numbers will go up again, as they have after the last seven quarterly reports!!

Google’s world is so large that it’s almost immeasurable. How do you quantify the search engine game? The advertising/marketing game? Very tough, but we do know Google owns it and sets the pricing. Google may be the most relevant company of this generation. I have said it before, like since the IPO, and have been laughed at and accused of Kool-Aid drinking. My response is, it tastes great!!

So Amazon is down $15 from its tripled price. Buy it folks, put it away and let the asset grow. Sure the three names all reported superb numbers, but more importantly, they reported great prospects going forward. This has been the case every quarter for the past couple of years.

Value guys, get used to it. The PE’s of these three will not be cheap; if they were I would not want to own them anyways.

Georges Yared is the CIO of Yared Investment Research and the author of Baby Boomer Investing…Where do we go from here?

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Filed under: Google (GOOG), Microsoft (MSFT)

Microsoft Corp. (NASDAQ: MSFT) ended up owning. 1.6% of Facebook, the second largest social network. The investment of $240 million values the private company at $15 billion.

The Wall Street Journal writes that “the Microsoft agreement comes after intense lobbying by Microsoft and Google (NASDAQ: GOOG) for Facebook’s hand. In recent weeks, executives including Microsoft Chief Executive Steve Ballmer have courted the three-year-old Palo Alto, Calif., company.”

Descriptions of the deal indicate that it focuses on helping Facebook to expand overseas with Microsoft supplying support by selling display advertising in the new markets.

But exactly what the world’s largest software company gets for its money is a little unclear. It does keep Facebook out of the hands of Google.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Law, Rants and raves, Google (GOOG), Politics

When I wrote last week that cocaine prices rose at a faster rate than the Dow Jones industrial average, I overlooked something: methamphetamine may be an even better “investment” than cocaine, when compared with the index. Marijuana isn’t doing too shabby either.

According to data on the DEA’s website, the average price per pure gram of all domestic methamphetamine soared 37% between January and June 2007, beating the 24% gain in cocaine, and eclipsing the broad market index, which rose about 7% during that same time.

I wasn’t able to find comparable data for marijuana but did come across an interesting story from Bloomberg News saying that prices for marijuana in Holland have soared 20% because of an increase in police raids. So any college students planning a trip to Europe should take note. U.S. pot prices have climbed over the last few years, according to the folks at High Times. I’ll update this post if I get more information.

Does this mean that people should dump their Google (NASDAQ: GOOG) shares and set up a crystal meth lab or start growing weed? Of course not.

As Mr. Mackey from South Park says, “Drugs are bad.” They’re bad for your health and bad for society. People should just say no to drugs, but they don’t and that’s the problem. Prohibition didn’t stop people from drinking in the ’20s, and isn’t stopping people from getting high today. My argument is that if we decriminalize drugs, the government can tax them and use that money to treat addicts.

Legalization is no utopia, but given the failure of the War on Drugs, it seems like it’s worth a try.

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Filed under: Law, Rants and raves, Google (GOOG), Politics

When I wrote last week that cocaine prices rose at a faster rate than the Dow Jones industrial average, I overlooked something: methamphetamine may be an even better “investment” than cocaine, when compared with the index. Marijuana isn’t doing too shabby either.

According to data on the DEA’s website, the average price per pure gram of all domestic methamphetamine soared 37% between January and June 2007, beating the 24% gain in cocaine, and eclipsing the broad market index, which rose about 7% during that same time.

I wasn’t able to find comparable data for marijuana but did come across an interesting story from Bloomberg News saying that prices for marijuana in Holland have soared 20% because of an increase in police raids. So any college students planning a trip to Europe should take note. U.S. pot prices have climbed over the last few years, according to the folks at High Times. I’ll update this post if I get more information.

Does this mean that people should dump their Google (NASDAQ: GOOG) shares and set up a crystal meth lab or start growing weed? Of course not.

As Mr. Mackey from South Park says, “Drugs are bad.” They’re bad for your health and bad for society. People should just say no to drugs, but they don’t and that’s the problem. Prohibition didn’t stop people from drinking in the ’20s, and isn’t stopping people from getting high today. My argument is that if we decriminalize drugs, the government can tax them and use that money to treat addicts.

Legalization is no utopia, but given the failure of the War on Drugs, it seems like it’s worth a try.

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