Finally, we can all get on with our lives. Google has gone public. You can start spending time with your family again, investigate other stock opportunities, watch some baseball, or take a last trip to the beach before summer ends. Rest assured, GOOG will still be trading when you come back.
In today's Motley Fool Take:
- Google Debuts at Last
- Shameless Plug: 3-in-1 Credit Report
- Buffett Begins to Buy
- Discussion Board of the Day: Living Below Your Means
- US Airways Loses Altitude
- Quote of Note
- More on Fool.com Today
Google Debuts at Last
The SEC has accepted Google's
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.
Shameless Plug: 3-in-1 Credit Report
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Buffett Begins to Buy
After selling off $430 million of equities in the fourth quarter of 2003 and approximately $150 million in the first quarter of 2004, Berkshire Hathaway
As W.D. Crotty reported on Aug. 17, the biggest move in the Berkshire portfolio was the addition of 8 million shares of Pier 1 Imports
The only other increase in the Berkshire portfolio was American Standard
Berkshire did continue to make some reductions in its equity portfolio. Holdings of Zenith National Insurance
The largest cut in absolute dollar terms was a sale of about 6% of its shares of HCA
It should come as no surprise that Buffett is looking at the beaten-down retail sector for investment opportunities. Berkshire's moves in the equity market in the next few quarters will be particularly interesting to watch -- Buffett has repeatedly said in the past that he was not finding many attractive opportunities in stocks. But if the market continues to fall, Buffett may start to do more than just nibble, and we could see some more aggressive buying from him soon. Stay tuned.
Fool contributor Salim Haji lives in Denver. He owns shares in Berkshire Hathaway but not in any of the other companies mentioned.
Discussion Board of the Day: Living Below Your Means
Are you able to make ends meet? How can you spend less than you make? All this and more in the Living Below Your Means discussion board.US Airways Loses Altitude
Remember the 1980s movie Wall Street, starring Michael Douglas and Charlie Sheen? For those who don't know, here's a recap: To impress financier Gordon Gecko, played by Douglas, Sheen's Bud Fox provides inside information about fictional BlueStar Airlines. The tip increases Gecko's fortune and launches Fox into his inner circle. But then Gecko decides he can clean up further by acquiring a controlling interest in and then liquidating BlueStar, for whom Fox's father, ironically played by Martin Sheen, works. I won't ruin the ending for you, but it's enough to say that there are twists and turns in the plot to destroy the fledgling carrier.
Fast-forward to now. As reported in yesterday's New York Times,US Airways
The liquidation threat seems genuine. Although Bronner is no Gordon Gecko, his chairmanship came through more than $240 million invested through Alabama's pension fund, which he runs. That money helped US Airways emerge from Chapter 11 reorganization last year, but the cost was giving the pensioner a controlling 37% stake and voting control over eight of the airline's 15 board seats.
Further, Bronner is on record as saying he will invest no more money in US Airways without major concessions from its unions. And talking with the Times, he remarked that investors, including his pension fund, now might do better if the airline filed for Chapter 7 bankruptcy and then they picked up its assets on the cheap to start anew.
Indeed, US Airways has been losing altitude for months, and liquidation may be its most realistic option. Will it happen? Maybe. Remember, in the early 1990s there were three high-profile airline liquidations: Pan Am, Eastern, and Braniff. The Pan Am fire sale back then was a huge boost to strugglingUAL's United.
But with AMR's
Perhaps Douglas' Gecko was right. In famously quipping "greed is good," Gecko was noting that some companies just aren't built to compete and need to be taken apart to make room for those that can. Sadly, that maxim is as true as ever in the airline industry today.
For more about the struggles of some airlines, see:
- Have Ailing Airlines Found a Cure?
- Discord at Delta
- Three Strikes and United's Out
- Unfair Airfare Warfare
- U.S. Airways' Tailspin
Quote of Note
"So much of what we call management consists in making it difficult for people to work." -- Peter Drucker, economist
More on Fool.com Today
In Julia Child on Investing, Selena Maranjian says the late master chef can teach us a lot about money.... Legg Mason's Mary Chris Gay talks about how to keep cool under pressure in Golden Rule of Investing.... In Why I Hate Social Security, Robert Brokamp wonders what you'd do with an extra 12.4% of your salary.
In other news:
For a list of all our stories from today, see our Today's Headlines page.
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