Google Like A Sore Thumb

Here is an interesting article snippit that highlights Google's financially precarious position. This is definitely not a stock to own at this time, unless you use put options.

For a quick and dirty comparison, here is a list of large American corporations. The market value of each of these companies is around $140 billion. Beside each company you’ll find annual sales for 2005, in billions.

JPMorgan --------------- $50
IBM -------------------- $94
Berkshire Hathaway ----- $76
ChevronTexaco ---------- $174
Proctor & Gamble ------- $58
Google ----------------- $4

Can you spot the over-valuation?

Even though Google earned only $1 billion last quarter, its costs are out of control. Google is paying $1 billion for 5% of AOL. It’s building 1 million square feet of office space within the NASA research park at Moffett Field in California.

They want to provide free wireless internet to everyone in San Francisco. They recently bought a new Boeing 767-200 wide body airliner with two staterooms and a shower. This kind of spending smacks of the internet craze of the late 90s.

We can’t use Google’s entry to the Hunny Club as a sell signal. There’s still too much upward momentum and we’d likely end up on the trash heap like all those other analysts.

But one thing is for sure: Sooner or later, just like those other market darlings, Google will be kicked out of the Hunny Club. When that happens, it may be an excellent chance to make some money.