Being Frugal With Google

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The SEC has accepted Google's (Nasdaq: GOOG) registration statement, and like that all of the buildup to one of the most anticipated IPOs in history can mercifully end. The company began trading today at $100, up from its IPO price of $85. Its founders and many of its employees are now stinking filthy rich, and the folks who successfully bid on the IPO got a little bit of a "pop" after all, about 17%.

That's wonderful. I guess now everyone can declare victory. I have friends who are longtime Google employees. I really, honestly, couldn't be happier for them and their good fortune.

But am I the only one who is sick to the gills of this story? Google has burned through tons of good will as a result of management's basic arrogance. "We're going public, we just don't want to have to talk to you, consider your votes, or tell you about our strategies." This is the entity that created all the fuss?

The stock's IPO was priced at a range where price-to-earnings aren't the best measure. More like "price-to-delusion," or "price-to-zip code."

Heck, Google looks like a steal when you use the venerable price-to-phone number ratio.

As always the market will have some say today in where Google will be priced, so the hue and cry on its overvaluation naturally looks somewhat crotchety. But while the votes are being counted, the sound you hear in the distance are the scales being set up so we can weigh this beast. If Google's value is to match its price at current levels, it has to achieve a nearly unequaled level of growth for a large company. Over time equilibrium will be restored -- I have a hard time coming up with a scenario that has this taking place anywhere near where the company is priced at the moment.

Then again, Bill Mann couldn't get his head around the whole WebTV thing either. He holds shares in no company mentioned in this article. We're sure that's a shocker.