As an investor, too many nodding heads make me nervous. I'd rather swim upstream; that's where the Rule Breakers are headed. Indeed, my lone multibagger, Akamai (Nasdaq: AKAM ) , came from being willing to defy a legion of headscratchers. And that maverick investing streak of mine makes me more than a bit uneasy when it comes to Google (Nasdaq: GOOG ) .
Buy now before it's too late!
Many of the folks who responded to my Google investing thesis from last week didn't share my concern. I wrote that the debut of Google Finance signaled a potential shift toward a new kind of portal, where light Web applications would be used to aggregate live data into rich, always-updated documents. In sum: It'd be My Yahoo! on steroids.
Most readers greeted this idea with enthusiasm. One even wrote, and I'm quoting here, "I agree Google is awesome and is only going to get bigger and better. Buy the stock before it is too late." Such unbridled enthusiasm made me want to run screaming in the other direction. I resisted the temptation and read more mail.
Most of it was equally bullish, but for cogent reasons. One reader, for example, wrote that Google's strategy is brilliant because "they are not attacking Microsoft (Nasdaq: MSFT ) , Yahoo! (Nasdaq: YHOO ) , or anyone else for that matter. They are merely assembling a system that all of us want to use." The reader went on to cite Writely and suggested that Web spreadsheet Num Sum could be next in Google's acquisition spree. (That makes sense, now that $2 billion more is about to pour into the search king's war chest.)
Google is just Yahoo!, but later to the party
Not all readers were bullish, however. At least one chided me for making Google sound like the innovator, when that's classically been Yahoo!'s role: "I find it very amusing when I see Google fanatics get excited when Google adds features that Yahoo! already has." He's talking, of course, about Yahoo! Finance. The reader went to say that Yahoo! has his portal business, and that he's been using My Yahoo! since 1999. "Was Google anything more than a search engine then?"
Nope, and that's a point worth discussing. It's easy to forget that Google is rarely first. Save for AdSense, its third-party online advertising network, I can't name a single market where Google has been first to the party, which is one reason why I've written that it is not a Rule Breaker.
But history suggests there's nothing wrong with that. For example, Dell (Nasdaq: DELL ) came long after IBM (NYSE: IBM ) . Wikipedia is an infant compared to Encyclopedia Britannica. So is JetBlue (Nasdaq: JBLU ) when compared to bankrupt Delta. All of them have performed famously as latecomers. Will Google endure in similar fashion? The reader has his doubts, if only because Yahoo! has seven years of innovation behind it and a good reputation as a portal provider. Google still has to build that goodwill, he says. I'm not so sure he's right, especially considering how many Web users set Google as their home page. Nevertheless, it's a point well made.
Microsoft: "We get it"
I didn't expect Mr. Softy to weigh in, but he did. Apparently this comment of mine was too much to bear: "But if either firm (read: Yahoo! and Microsoft) understands the idea of value creation using the Web like Google, they have yet to show it."
The response came fast and fierce: "Um, you've heard of Windows Live, right? I believe that's 'showing it.'" I had indeed heard of Windows Live. It's an interesting site that essentially allows you to build your own portal, using services like mail and messaging. But it seems to me to be much more like My Yahoo! than what I believe Google is trying to create.
Of course, I could also be drinking too much of the search king's particular brand of Kool-Aid. That's what this particular Microsoft employee seems to think: "Believe me, there are PLENTY of people inside Microsoft right now who 'get' Web 2.0 just fine. In fact, we get it enough to understand that 'Web 2.0' is a hyped term that people should stop using." Fair enough. In fact, it's probably worth noting that AJAX, the technology that's often touted as a Web 2.0 enabler, was born from Microsoft initiatives.
A Foolish finale
Whether we're bulls or bears, one thing is certain: Google has a grip on our imaginations. For some, that has become a reason to buy the stock. For others, it's a reason to keep a distance. I tend toward the latter.
Yet I have to concede that there's an investing case for Google: No one has been right about the company. Ever. That's because there's very little good information about Google's plans, and that makes estimating future cash flows all but impossible. Without those forecasts, valuation becomes an exercise in arm-flapping. Accordingly, conservative investors eschew Google's shares. The bold, however, turn to the lessons provided by earlier business revolutions and see years of value creation ahead. Which will it be? I have no idea. And that's what thrills me most.
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Fool contributorTim Beyersthinks Microsoft generally doesn't get enough credit, but still believes Google is ahead when it comes to Web-enabled services. Tim owns shares of Akamai. You can find out what else is in his portfolio by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.