"My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!"
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.

            -- "Ozymandias," Percy Bysshe Shelley

Enjoying National Poetry Month? I certainly am. All giants of this day can probably expect the fate of Ozymandias eventually, and lots of people think that Google (NASDAQ:GOOG) will see its day of reckoning sooner rather than later.

With that, I must disagree, and you'll soon see why. Here's a brief look at the search and advertising king and its place in the business world today, in preparation for Thursday night's first-quarter report.

What analysts say:

  • Buy, sell, or waffle? Forty-one Wall Street analyst firms follow Google today. Thirty-six of them have a buy rating on the stock; three are holding; and two want to sell. In our Motley Fool CAPS investor community, it's a firmly established one-star stock -- the lowest possible rating -- based on input from more than 4,600 users.
  • Revenues. The consensus view calls for about $2.5 billion, 63% higher than the $1.53 billion produced a year ago.
  • Earnings. $3.30 per share would satisfy your average analyst forecast, 44% above last year's $2.29 per share.

What management says:
People have this misconception that Google is a search engine. In reality, it is an advertising juggernaut with aspirations far outside the narrow Web. Which is why Google is dabbling in everything: audio with radio stations, office applications, directory assistance, interactive maps and much more. Co-founder Sergey Brin noted: "The ability to offer premium online and offline inventory, along with the control and analytics to optimize it, puts us in a position to provide a complete sales and marketing platform for all advertisers."

Make no mistake -- the search functionality is still important, as it drives plenty of ad traffic and builds Google's brand image in the minds of consumers. But it's not the money-maker anymore, if it ever was. Advertising is.

What management does:
As you advance through Google's income statement over the past year, the better the margin trends look. That hefty spike in the latest net income margin is somewhat artificial, though -- benefiting from the sale of more than $40 million in marketable securities relating to Google's investment in Baidu (NASDAQ:BIDU).

But then, there's a deteriorating free cash flow ratio to deal with. It's quite simple, really: Google is reinvesting almost exactly half of its robust operational cash flow into the business in the form of capital expenditures.

CFO George Reyes explained this in the latest earnings call. "The majority of our capex is related to IT infrastructure investments," he said, "including data centers, servers, and networking equipment. Our leadership in search and ads is a direct result of our relentless focus on building the most robust platforms for our users."

"As we scale, our business increasingly requires substantial computational power. In 2007, we expect to make significant capital expenditure investments. It is important to point out that the strategy of aggressively investing in our infrastructure has paid off handsomely and remains critical to our success, and we intend to follow this strategy for the foreseeable future."

Margins

9/2005

12/2005

3/2006

6/2006

9/2006

12/2006

Gross

57.2%

58.1%

59.0%

59.6%

60.2%

60.3%

Operating

37.8%

38.0%

38.3%

38.2%

38.3%

38.2%

Net

24.7%

23.9%

23.7%

25.2%

26.0%

29.0%

FCF/Revenue

28.9%

26.4%

24.0%

16.9%

16.6%

15.8%

YOY Growth

9/2005

12/2005

3/2006

6/2006

9/2006

12/2006

Revenue

96.7%

92.5%

88.1%

83.3%

77.5%

72.8%

Earnings

483.6%

267.2%

139.7%

113.5%

86.5%

110.0%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
What Mr. Reyes is saying is music to my Eustachian tubes. That willingness to spend money now to make money later is part of Google's secret sauce, methinks. It's not just capital expenditures, either -- last quarter, Google doubled its R&D expenses over the year-ago period, and the acquisition spigot appears to have been opened with a firm hand.

I've been wondering aloud and in public (the odd looks I get make for great icebreakers; try it sometime) what Google wanted to do with its massive and ever-growing cash stash, and now we're getting some clues. There are advertising firms to buy, business centers to open in Shanghai and Ann Arbor, and lots of other costs of growth that add up to billions in the long run.

Looking at the growth trends above and considering the tenor of Googlish communications of late, I'd say that the analysts are looking pessimistic again. With earnings picking up over the last couple of years, the Google stock doesn't even look terribly expensive anymore at a trailing P/E ratio of 47.

Yahoo! (NASDAQ:YHOO) has become the possible value trap in this market, with a trailing P/E ratio of 58, and it only takes an 80% earnings growth rate to land Google in the mid-20s of forward-looking earnings-based valuation. That's akin to some very mature companies like, say, Microsoft (NASDAQ:MSFT), albeit with much tastier growth opportunities.

So who is the next Ozymandias here? My tea leaves say that it isn't Google, at any rate.

Read the pedestal, Fool:

Yahoo! is a Motley Fool Stock Advisor pick, and Microsoft a Motley Fool Inside Value selection. Our newsletter analysts' tastes run counter to this Fool's, but perhaps that's all the more reason why you should get the other sides of this story with a couple of free 30-day trial subscriptions. Go ahead -- you won't hurt Anders' feelings in the slightest.

Fool contributor Anders Bylund holds no position in any of the companies discussed here, mainly because he can never be quiet about them for long enough to build a position. You can check out Anders' holdings if you like, and Foolish disclosure will be here after the rest of us are long forgotten.