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).
- Peter Yared
- Peter Yared is the CTO/CIO of CBS Interactive, a top ten Internet destination, and was previously the founder and CEO of four enterprise infrastructure companies that were acquired by Sun, VMware, Webtrends and TigerLogic. Peter's software has powered brands from Fidelity to Home Depot to Lady Gaga. At Sun, Peter was the CTO of the Application Server Division and the CTO of the Liberty federated identity consortium. Peter is the inventor of several patents on core Internet infrastructure including federated single sign on and dynamic data requests. Peter began programming games and utilities at age 10, and started his career developing systems for government agencies. Peter regularly writes about technology trends for CNET and has also written for the Wall Street Journal, BusinessWeek, VentureBeat and AdWeek.
Many thanks to Bob Pulgino, Dave Prue, Steve Zocchi and Jean-Louis Gassée for mentoring me over the years.