GOOG Passes EBAY

Today Google popped its head out of its groundhog hole and didn't see its shadow.

Google is worth more than eBay (by market capitalization) for the first time ever, thanks to an amazing earnings report that featured their first-ever billion dollar quarter and their first-ever billion dollar net cash year.

It took a little more than 8 years for eBay (launched in late 1995) to reach $3b in annual revenues -- meaning it experienced faster growth than did Microsoft, Dell, Wal-Mart Stores and Cisco Systems at the same point in their histories. However, it took less than 6 years for Google (launched in late 1998) to reach $3b in annual revenues -- making it an even-faster-growing-company than eBay.

Which makes me want to revisit market caps for the first time since Google went public. (Note how the acquisitions continue...)

Current market caps (and as of August 2004):

General Electric $383b ($343b) -- and spun out Genworth for $13b
Exxon Mobil $348b ($293b) -- up $50b in 6 months
Microsoft $288b ($295b) -- do they have any new products coming out in 2005?
Citigroup $258b ($237b)
Wal-Mart $225b ($234b)
BP Amoco $224b ($215b)
Johnson and Johnson $196b ($169b) -- buying Guidant for $24b
Pfizer $181b ($237b) -- down $50b in 6 months
AIG $174b ($183b)
IBM $157b ($142b)
Intel $143b ($141b)
Berkshire Hathaway $139b ($133b)
Procter and Gamble $135b ($140b) -- buying Gillett for $57b
Altria $131b ($99b) -- up a third in 6 months
Toyota $129b ($130b)
Cisco $120b ($129b)
Chevron Texaco $118b ($99b)
Dell $103b ($88b)
Coca Cola $101b ($107b)
Verizon $99b ($110b) -- buying MCI for $6.7b
Home Depot $91b ($80b)
Pepsico $91b ($88b)
Wachovia $89b ($75b)
UPS $84b ($80b)
Time-Warner $83b ($75b)
SBC Communications $81b ($84b) -- buying AT&T for $16b
Oracle $71b ($54b) -- absorbed Peoplesoft for $10.5b
Comcast $71b ($64b)
Tyco $69b ($64b)
Conoco Phillips $66b ($50b)
3M $65b ($63b)
Merck $63b ($100b) -- down more than a third in 6 months
Morgan Stanley $62b ($55b)
Disney $59b ($46b)
Hewlett-Packard $59b ($54b)
Kraft Foods $58b ($52b)
Google $56b ($27b) -- more than doubled in 6 months; much closer to becoming the biggest and most important company in the world in 4-7 years
Merrill Lynch $56b ($47b)
Goldman Sachs $53b ($43b)
News Corp $53b ($52b)
eBay $52b ($53b) -- lost $20b in the last month
Yahoo! $49b ($38b) -- sustained, steady rise (up fourfold in the last two years)
SAP $48b ($46b)
DuPont $48b ($42b)
Daimler Chrysler $47b ($45b)
Target $46b ($40b)
Boeing $44b ($42b)
Diageo $42b ($38b)
McDonald's $40b ($33b)
Anheuser-Busch $39b ($42b)
Sprint $36b ($32b) -- buying Nextel for $32b
Apple $32b ($12b) -- more than doubled in 6 months
Caterpillar $31b ($25b)
Fedex $29b ($24b)
Prudential Financial $28b ($24b)
Alcoa $26b ($29b)
Cendant $24b ($24b)
Ford $24b ($26b)
Nike $23b ($19b)
Costco $22b ($19b)
Starbuck's $22b ($19b)
General Motors $21b ($23b)
Gap $19b ($18b)
Halliburton $18b ($14b)
Harley-Davidson $18b ($18b)
John Deere $17b ($15b)
Amazon $17b ($16b)
InterActive Corp $17b ($19b)
AT&T $16b ($11b) -- about to be absorbed by SBC Communications
Adobe $15b ($11b)
Symantec $15b ($15b) -- buying Veritas for $11b
Hershey $15b ($12b)
Schwab $15b ($12b)
Sun $15b ($12b)
Xerox $13b ($11b)
Southwest Airlines $11b ($11b)
Sears $10b ($7b) -- buying KMart for $9b
Eastman Kodak $10b ($8b)
New York Times $6b ($6b)
Pixar $5b ($4b)
Tiffany and Co $4.5b ($5b)
Monster $3.5b ($3b) -- will Yahoo or Google buy them?

Can Google rise indefinitely without taking a break? Of course not. Wrote David Callaway:

At last glance, it looks like Credit Suisse First Boston holds the "Henry Blodget Cup" for most bullish call to date, having slapped a $275 price target on the shares, which jumped 14 percent on Wednesday to close at $205.96. Goldman Sachs came in second with a $265 per share price target...

Institutions who enjoyed the December stock market rally but got burned in January's brutal sell-off are sitting on a pile of New Year's cash, just waiting for an opportunity. Google was a no-brainer as a momentum play after its earnings.

It's the same money that will continue to fuel a rally in the market, especially tech stocks, this spring until the Federal Reserve either bumps up the pace of its interest rate hikes or the weak dollar becomes a crisis.

So as crazy as they seem, CSFB's and Goldman's price targets for Google will probably be realized, and likely sooner than later. Do I hear three hundred dollars?

But then, oh then. The deluge. No stock can go up like this forever. And as different as Google might be from its knuckle-dragging, point and click forerunners, at some juncture the hype and hubris it has created will turn on it like a rabid sock puppet.

It won't take but a small statement about online advertising, perhaps on a quiet Tuesday afternoon following the close of trading, to trigger the selling. And by the end of the next day Google's shares will be down 25 percent and headed lower.

Google's market value this week, at about $56 billion, is coincidentally also equal to Merrill Lynch's market cap, while Schwab's has now fallen to $15 billion.

It's not a question of if the mighty will fall, simply a question of when. Google's time has not yet come.

On that note, let the insider selling continue while the getting is gooooooood. If you need something to encourage you to dump more, re-read this New York Times piece -- and I quote,

In November, 47 percent of searches in the world were on sites owned by Google, up from 44 percent a year earlier. Yahoo's sites rose to 27 percent, from 25 percent a year ago.

But underneath those numbers, Yahoo is making significant gains, particularly in the United States, with new features that it has yet to introduce to international users. And at a time when Google has stalled in getting some new products to the market, Yahoo has been methodically working on a master list of projects: first, core Internet search, then shopping search, local search and next travel search, according to Danny Sullivan, the editor of Search Engine Watch, an Internet news site. He said Google had been more erratic.

"Yahoo says, 'Where is the mountain? Let's climb it,' " Mr. Sullivan said. "Google says, 'Maybe we want to go up the mountain and maybe we want to go surfing.'"

In the United States, Yahoo is gaining on Google. Yahoo's share rose to 35 percent of searches in November from 29 percent a year earlier, according to ComScore. During the same period, Google rose to 38 percent from 37 percent. And Yahoo is receiving acclaim for some of its innovations, like local search that allows users to see a map that pinpoints the location of the area or business they are searching for.

"Each one of our new products can bring in new users who rediscover the core product we offer," said Jeff Weiner, Yahoo's senior vice president for search.

A study of consumer behavior by Keynote Systems showed that while Google remained the top search engine, ranked by the perceived quality of customer experience, both Yahoo and MSN were closing the gap.

Mr. Sullivan said he believed that over the last year Yahoo had focused on improving its core search service, while Google's management was preoccupied with its elaborate stock offering.

Keep that wonderful PR coming, Google...