IP Democracy: The ABCs of Google

If I were a Google executive, I’d just stop reading any analysts’ assessments of the company. In just a few short weeks, Google has gone from hero to has-been, if two divergent analyst reports are any indication. First, right after the New Year, Piper Jaffray analyst Safa Rashtchy raised the one-year target price on Google to over $600/share, sparking all kinds of crazy speculation ($1,000? $2,000? $3,000?) on how just how high Google’s stock can go.

Rashtchy’s recommendation: buy.

Now S&P’s Scott Kessler is saying Google is out of steam. Kessler warns of Google’s “ABCs,” which he says pose a risk to Google’s growth. A stands for “absence of material diversification,” meaning that Google’s revenues are 99% dependent on click advertising. B stands for “building competition,” which means that Google is facing stiffer rivals, such as Yahoo, in the search market.

And C stands for “click-fraud.” Kessler thinks that click-fraud on Google is substantial and once the amount of fraud becomes known, it could hurt Google’s shares.

Kessler’s recommendation? Sell.

Oh brother.

Posted by Cynthia Brumfield on January 19, 2006 1:23 PM to IP Democracy