Advice for Google Investor Relations

Is Google a good or bad investment after it closed the year out at $460.48?  Google shares closed out 2005 at an adjusted $414.86 but closed as high as $471.63 in January 2006.  The high and the low for the year $513.00 and $331.55 respectively.

The Financial Times recently rehashed how YouTube software is still a threat to Google’s plans and youcan see what Doug of 24/7 Wall St. keyed in on that here too.

Motley Fool said on December 27, 2006 that it may be the worst stock for 2007.

Calling anything bearish on Google can create a near riot in the investment community.  You can take a look at the November search rankingsfrom Nielsen/NetRatings in this link and see if you think the glorygrowth has already happened or if any leveling off was merely a blip.

My partner recently ran something asking if Google’s growth has run out of runway. 

Everyone knows that Jim Cramer still loves it, although he even said it’s asleep until after the new year.

Most of the analysts that follow the stock are positive and anaverage price target is close to $550, depending on which analysts youcount in a consensus. 

One thing is for sure right now in my opinion: If GOOG announced astock split and went to a normal share pricing with say a 5-1 stocksplit or even a 10 for 1 stock split, this would be a differentdiscussion and we could all move on beyond "How high Google’s share price is" and we could all finally discuss the stock’s growth prospects other than some late 1940’s archaic belief that the sound barrier was unbreakable.  There is merely too much focus on a HIGH STOCK PRICE.  Idon’t have any dogs in the fight either way, but much of the realdiscussion and criticism out there seems to be based on this $500mark.  Most of the smaller investors out there think the stock is tooexpensive to buy.  After all, if a small investor wants to invest $5,000 they will think about investing elsewhere because who out there wants to buy 10 shares of stock.

So, get the Google management to use 2007 as "The Year Google Split Its Stock." This won’t change the company fundamentally at all, but it mightactually help even sophisticated investors look at the company easier.  GOOG shares have a market cap of more than $140 Billion.  Its trailing P/E is 58.7,and with the street looking for roughly $13.75 in 2007 earnings it hasa forward P/E of 33.6.  For the sort of earnings and revenue growth thecompany has posted it just doesn’t look or feel expensive.  But a growth stock at $400 or $500 sounds expensive and looks expensive.

Dear Google Management: Split your stock so the investment communitywon’t be so hung up on the share price. Most people get it, but thereare too many who are just hung up on the stock price. Period.

Feel free to make a prediction and send it in: Will GOOG the stock be at $600 or $300 at the end of 2007?  Will Yahoo! recapture losses to Google?  Will AOL win back more and more of the Internet pie?  What will be the biggest Internet and media merger merger in 2007?

Jon C. Ogg
December 29, 2006

Jon Ogg can be reached at [email protected] for emails.  He does not own securities in the companies he covers.