Daily Archives: February 13, 2006

Has Google peaked?

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Barron’s, the influential US financial publication, seems to think so. Excerpt from an interesting piece:

INVESTORS HAVE BEEN FIXATED on Google the past few weeks, as its shares have tumbled nearly 25% from a peak of $475 — and the fact is, there could be a lot more tumbling ahead. The share price could well be cut in half over the next year as the Internet giant grapples with growing competition from Microsoft and Yahoo!, increased pricing pressures in its online ad sales and mounting concern about what’s known as click fraud.

Barron’s thinks that Google stock is overvalued by at least a factor of two. Reasoning:

To get a sense of what might happen to the stock, we gave one über-bull’s 2006 revenue estimate for Google a 20% haircut, trimmed his projected expenses by 5% (but no further, because bulls greatly underestimate Google’s costs), deducted stock-based compensation and, generously, gave the company credit for the considerable interest income on its cash. The result: Earnings would be 30% lower than the bull’s projection, at $6.28 a share. If the stock were to maintain its current multiple of 41 on those lowered earnings, it would be worth $257. It’s more likely the multiple would shrink to as low as 30, in line with the slower growth. That would make the stock worth $188, versus its recent $360.

Since I don’t own any shares, it’s all theoretical to me. But it goes to show how overheated the Google stock-hype (with some people fantasising about a share price of $2000) could turn out to be.

Common sense on free speech

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Terrific piece by philosopher Onora O’Neill in today’s Guardian…

Yet even committed liberals don’t seriously think that rights to free speech are unlimited or unconditional, although they seem to be unsure about which limits should be set. They are often torn between an aspiration to justify free speech as minimal and uncontroversial, and a contrary belief that free speech matters because it is not minimal but powerful. This double vision is well reflected in contemporary tendencies to construe freedom of speech as freedom of expression. Freedom of expression sounds so harmless: merely a matter of expressing oneself, seemingly no more than an aspect of individual privacy. Yet most speech acts are not merely expressive. They are intended to communicate, and may affect, even harm others. The nursery jingle “sticks and stones may break my bones, but words can never hurt me” is palpably false.

Prosper.com

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It’s funny what the Internet makes possible. After FON. com comes Prosper.com, a service described by the New York Times as “a mixed brew of eBay, Friendster and the local bank.”

On Prosper.com, prospective borrowers register with the site and allow the company to review their credit history. Then borrowers post a loan request of up to $25,000, along with an upper limit for the amount of interest they are willing to pay. Loans are not secured by collateral and are paid off over three years at a fixed rate, with no prepayment penalty.

Lenders essentially deposit their money with Prosper — which holds it in an interest-bearing account with Wells Fargo— and either review the loan requests individually or fill out a form permitting Prosper to allocate money to borrowers who meet certain criteria.

Chief among those criteria is the borrower’s rating from the credit reporting bureau Experian, but borrowers can also join or create groups with defined interests or characteristics that, they hope, will make them more attractive to some lenders.

Among the groups on Prosper are aficionados of the Porsche 914 model, associates and employees of a Berkeley cafe and Vietnamese-American students. Borrowers, who typically post their loan requests and any group affiliation, along with a description of who they are and why they need the money, then wait a maximum of two weeks for lenders to bid in ever-lower interest increments for the right to issue the loan.