Blogroll Me!

Monday, October 04, 2004

The Dividing of Net Stocks

I received an interesting piece of research the other day that I actually agreed with. Sacha Raftchy (sic) of PJ correctly notes that there is a bifurcation in the business models of internet stocks. There are extremely leveragable models (EBAY, YHOO) and then there are models that are incremental improvements on telephone-based businesses (IACI - travel agencies, AMZN - catalogues). I appreciated the research because it addressed a fundamental point that I always assumed, but now realize that many others hadn't considered: There is a difference! That's why I invested in Google, because its biz model falls into the former -- It's highly leveragable. Interestingly enough, I think there is one company that does the latter, but does it so well, it deserves a high valuation like the former: Dell. Think about it, Dell is *only* a computer manufacturer - desktops no less! But, they do it so well that they have crushed all comers. I mean for god's sake, they've put their HQ in South Dakota! That's what I call sacrificing for the biz model.
So anyways, back to the topic. GOOG has what YHOO, EBAY and DELL have - set it up, put it on the net and let it run. For instance, wait until GOOG goes international. It still has that lever to pull in a big way. I think the stock isn't extremely cheap like it was at the IPO. But, there is still a chance that it could outperform these expectations and be bigger than it's biggest fans imagine.
Meanwhile, I look forward to their first earnings release.

Subscribe in NewsGator Online Blogroll Me! Subscribe with Bloglines Who Links Here

Email Me