Tribunal declara insolvência da antiga TAP SGPS. Acabou a Siavilo

[Ulisses Pereira]

Aqui fica uma polémica análise que o Cramer acabou de fazer sobre a Google.

Ulisses


"Google: New Winner of the New World"


By James J. Cramer
RealMoney.com Columnist
10/22/2004 3:22 PM EDT

"$250? How do you get to $250? Have you learned nothing from the boom-bust of the old days? Why not $350? Why not $500?

To which I say, why not $500?

Of course, we are talking Google (GOOG:Nasdaq - commentary - research). We can make fun of these projections. I can't wait until Barron's comes out tomorrow and Alan Abelson opines about my analysis of Google. There's nothing I like more than pre-empting our colleagues from the newspapers -- or weeklies in Barron's case. So, in that spirit, I've decided to beat him to it. Or at the very minimum, explain my position, and you can decide who's right.

When I started writing this column in 1996, it was meant to be a window on big money, and what hedge funds do and think. I am no longer a hedge fund manager -- someone tell Patrick Byrne from Overstock (OSTK:Nasdaq - commentary - research) that please -- but I know what they think and how they think and how they game things.

In 2000, I gave a speech talking about Winners of the New World and I correctly represented a series of incredibly hot stocks that were going up by leaps and bounds until they collapsed. I got in; I got out; anybody who reads me knows that because at that time I was allowed to short and I disclosed when I shorted and I was eventually short most of what I liked at the time of the speech. That's the way it is. Before I gave the speech, I told the people who asked me to speak that I could represent either what I thought was right for the audience or what I am buying now. They wanted the latter; I gave it to them.

If I were still at my hedge fund, I would be buying Google now, expecting it to go to $250. Here's why.


First, the Street believes that Google could earn $3 next year. But the Street was way too conservative about this quarter and I bet they are way too conservative about next year. That's their nature. I think GOOG could earn $4.

Second, eBay (EBAY:Nasdaq - commentary - research) and Yahoo! (YHOO:Nasdaq - commentary - research) are the only cohorts here. Amazon (AMZN:Nasdaq - commentary - research) and Interactive (IACI:Nasdaq - commentary - research) and AskJeeves (ASKJ:Nasdaq - commentary - research), by the way, aren't, and it is a credit to this far more rational market that those stocks are all down on this news. They should be; they don't have this kind of growth. There are only three horsemen now: Yahoo!, eBay and GOOG.

Yahoo! trades at 104 times earnings. eBay trades at 80 times earnings. This company grows faster than both of those. It also is hard to borrow because so many people are betting against it because of the lockups.

So, I say, let's give it the multiple it deserves If you think -- and the market clearly does think -- that Yahoo! and eBay are worth what they are trading at. Clearly, they are, or they wouldn't be there. Right? That's real money changing hands.

That means $4 times 100 equals $400. I didn't say that on TV only because that would have made me seem like a total wacko. But believe me, that's what the buyers are thinking.

Are the buyers right? Short term, I think yes. When you have a hard-to-borrow stock with real growth prospects and real earnings, the stock's heading north.

Should it trade there? A ha, that's Abelson land. And quite frankly, I'm not interested in going there. I am trying to make money; don't ask me to intellectualize the darned process. I am trying to help our readers make money, not lose money.

That's what makes me different, and more intellectually rigorous, frankly, and I don't want to say the armchair guys are more rigorous because they simply aren't. Or, as I like to say when I am really on my high horse -- that's empirical.

Now, the caveats. Execution? Could go awry. Insider selling? Could overwhelm, but doesn't affect the multiple all that much. Competition? From whom?


That brings me to the conclusion that it could go much higher. I used $250 because that allows me the luxury of seeing Google earn $4 and have it get a 60-and-change multiple because it is younger and less-seasoned and experienced than Yahoo! or eBay.

Now, here's the really interesting rub. None of these companies is Commerce One or Vertical Net. Those were all relative multiples too, but relative to estimated sales, not earnings, and none of the sales projections came through. Ultimately, in retrospect they were just short squeezes.

These are different. These are multiples to earnings, earnings that the company can deliver. That makes it more realistic and less absurd than 1999.

It doesn't mean I won't be made fun of for this analysis. It does mean that Google can stay up longer than the Winners of the New World. But if it can't, I will, right here, tell you otherwise.

Until then, $400 here Google comes. Oops, I mean $250. "

(in www.realmoney.com)