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

By

Bill Mann (TMF Otter)



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.

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Buffett Begins to Buy

By

Salim Haji

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(NYSE: BRK.A)(NYSE: BRK.B) added stocks worth about $80 million (net of stock sales) to its equity portfolio in the second quarter. Given that Berkshire's equity holdings total more than $36 billion, an increase of $80 million is hardly an overwhelming vote of confidence that the U.S. equity markets have hit bottom. But the moves do indicate that some attractive values may be emerging in beaten-down sectors.

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(NYSE: PIR), currently valued at just more than $141 million. Along with the rest of the retail sector, Pier 1 has been battered, and its attractive valuation and strong balance sheet clearly caught the eye of Berkshire's stock-pickers.

The only other increase in the Berkshire portfolio was American Standard(NYSE: ASD), a diversified manufacturer of air conditioners, bathroom fixtures, and brakes. Sexy and exciting? Perhaps not. But the stock has returned more than 44% in the last year in a lackluster market and has significantly outperformed the S&P 500 and the Nasdaq in the last five years. The stock split three-for-one in May, and Berkshire increased its position by about 8%, bringing the total holding to almost $425 million.

Berkshire did continue to make some reductions in its equity portfolio. Holdings of Zenith National Insurance(NYSE: ZNT) were cut by more than 50%, and holdings in Mueller Industries(NYSE: MLI), a maker of copper tubes and fittings, were cut by about 20%. Both of these companies represent only a small portion of the portfolio -- after the reductions, Berkshire held only about 54,000 shares in Zenith worth less than $3 million and just under 2 million shares of Mueller worth about $70 million.

The largest cut in absolute dollar terms was a sale of about 6% of its shares of HCA(NYSE: HCA). Berkshire sold off 910,000 shares of the health-care company, valued at approximately $38 million. In addition, Berkshire also made small reductions of less than 1% in its holdings of Gannett(NYSE: GCI) and Sealed Air(NYSE: SEE).

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

By

Tim Beyers

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(Nasdaq: UAIR) chairman David Bronner said the airline's employees must accept more than $800 million in salary and benefit cuts in the next 30 days for the company to avoid liquidation. The timing relates to covenants it must meet in federally backed loans that secure agreements with aircraft lenders.

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(NYSE: AMR) American begging for spare change and Delta(NYSE: DAL) on the verge of bankruptcy, I can't see anyone coming in to pick up the pieces if US Airways shuts off its engines for good. Indeed, I see it only leaving more opportunity for the low-fare carriers, notably Motley Fool Stock Advisor pick JetBlue(Nasdaq: JBLU).

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:

Fool contributor Tim Beyers owns no interest in any of the companies mentioned, although he has family members who are now retired from United Airlines. You can view Tim's Fool profile here.

Quote of Note

"So much of what we call management consists in making it difficult for people to work." -- Peter Drucker, economist

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