Friday, October 19, 2007

GOOG >= MSFT Redux

I got some good natured ribbing when I posted nine months ago that Google would soon exceed Microsoft's market cap on the rational that the market would soon value the dominant Internet company as worth more than the dominant PC company. At the time, Google was worth $150B (64 P/E) and Microsoft was worth twice as much at $300B (26 P/E).

Google is now worth $201B and Microsoft is worth $284B, so Google is now worth 71% as much as Microsoft. If Google's P/E had held at 64 it would now be worth more than Microsoft. At Google's current P/E of 55, it only needs to increase its annual revenue by a few billion to equal Microsoft's market cap.

That would put GOOG at $915/sh, although it is likely that some type of market correction will lower the value of both companies. It is also interesting to note that Google is now worth more than CSCO, the dominant networking company, whose market cap is $192B (27 P/E).

1 comment:

Delores said...

Need I mention how insane a 64 P/E is? "worth" isn't a word that really needs to stay in the post. Maybe "wampum may be exchanged for ..." or something.