Hey, Look Who's Now The 5th Biggest Company in the US | Hacker News Reader

Hey, Look Who's Now The 5th Biggest Company in the US

alleyinsider.com

14 pointsnickb19 comments

They're bigger than Toyota. And that's the No 1 carmaker in the world. They're bigger than WalMart, bigger than any U.S. bank. They're valued at 13 million dollar per employee.

This can't be right, can it? There has to be more money in selling cars than in selling online text-ads, hasn't there?

Car makers have a very low profit margin. Toyota has about 7% (and that's very high for cars -- GM has like 1%). Google has about 30% profit margin. There's definitely a lot more money in cars in general (in terms of revenue), but Google's net income for 2006 was $1 billion more than GM, despite GM having about $197 billion more in revenue. Having high revenues doesn't mean you're making a lot in profit, which is what counts.

Though, GM is probably not the best example...it's bleeding cash at the moment, and has even had negative earnings some quarters.

If you want to play the profit game, compare Google's profit to Wal-Mart, Exxon-Mobil, and CitiGroup. We're not even in the same league here. In fact, we're not even in the same order of magnitude!

Again, Google making that list (and having a high market cap) is much more an effect of it's expected growth (and high multiple) than it's actual present value as a company.

Just nitpicking here, but Citigroup turned a loss this past quarter due to mortgage-backed security writedowns. I think Google actually turned a respectable profit.

"There has to be more money in selling cars than in selling online text-ads". Now that was funny.

Google needs to buy Toyota while the valuation is still high.

Cars need ads to be sold. Ads don't need cars to be sold.

This is a market cap ranking. Even Microsoft ranks on this list. Put it in perspective: if you define big by "actual revenue" (as the Fortune 500 does), Microsoft doesn't break the top 40. At ~10Bn+ in revenue, Google wouldn't make the Fortune 100. Sort the Fortune 500 by profit and Google still isn't in the top 20.

Market cap is a measure of the market's expectations for future profit. But it's not a reliable one. Where's Qualcomm and Tellabs now?

Revenue is a very poor measure of a company's success.

If anything, you should at least rank earnings, since that incorporates profit margins. If I sell $5 trillion of goods at a 0% margin, that doesn't make me a very successful company.

I agree, but market cap is a far worse metric.

Geez. You scared the shit out of me. i was thinking "Facebook"

same!

LOL, no offense, but that's just silly. Even with the ridiculous valuations of 15+ billion floating around, that wouldn't put facebook in the top 500, let alone top 5.

that made me feel really small

Sorry! Wasn't my intention.

Yeah, me too.

And with so little debt. Though, these rankings are done by market capitalization. The true, sheer size of some companies ranked much lower are actually much larger with regard to revenues and profits...they're just not trading at 55 times earnings.

But, Google's market cap is indeed 5th. That's incredible any way you slice it.

I love the phrase "trading at a not-preposterous 55x earnings"

Let's look at P/E ratios of their competition at the top:

XON 13

GE 18

MSFT 24

AT&T 30

Citigroup 8

Let's look at some other big web/software firms:

Oracle 26

Adobe 42

Yahoo 60 (40B market cap)

Amazon 100 (but only a 30B market cap)

Google's Market Cap is 220B. The older big software companies (Oracle, Adobe, MSFT) seem to have been stuck between 20 and 40 for a while now. I conclude based on this rigorous analysis that Google's eventual ideal P/E is around 30, and that investor hype has inflated its value by around $110B, or about 1% of US annual GDP.

Seems like Google is bigger than the rest of the players on the web. http://fishtrain.com/2007/10/30/google-worth-more-than-rest-...

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