On Thu, 29 Apr 2004 20:55:12 GMT, rockhound <user@null.org> wrote:

>I was looking at the following as an easy inroad
>
>Pfizer currently trades for 17 times the company's expected earnings
>for 2004 of $2.12 per share. That is a discount to the overall market
>and a fairly modest valuation considering the company's earnings
>should show double-digit growth over the next five years.

Maybe I would sleep better at night if I went in on this one instead:

Inside the Google empire

Larry and Sergey explain why Google is different
An insight into the world's leading search engine has been provided by
the documents filed by Google to the US financial authorities.
The tone is set in a letter from co-founder Sergey Brin and Larry Page
in which they explain how they are different from other businesses.

"Google is not a conventional company," said Mr Brin and Mr Page. "We
do not intend to become one."

The two spell out their approach in a section entitled "Don't be
evil".

"We believe strongly that in the long term, we will be better served -
as shareholders and in all other ways - by a company that does good
things for the world even if we forgo some short term gains," said the
letter.

"This is an important aspect of our culture and is broadly shared
within the company."

This is reflected in how it treats its employees, all of whom hold
shares in the company.

"As a result, many employees are highly motivated to make the company
more successful," said the filing.

Google now employs 1,907 people, compared to 284 in 2001. Most of
them, 961, work in sales and marketing, while a further 350 deal with
administrative tasks.

But a substantial proportion, 596, devote their time to research and
development and they are encouraged to spend 20% of their time on
independent projects.

Technology tools


The S1 filing to the Securities and Exchange Commission spells out the
basis of Google's search technology - its PageRank system which
calculates the importance of a web page by analysing the number of
links to it.

KEY PERSONNEL
Eric Schmidt, CEO: Salary $250,000 - Bonus $301,556
Sergey Brin, president of technology: Salary $150,000 - Bonus $206,556
Larry Page, president of products: Salary $150,000 - Bonus $206,556
Omid Kordestani, president of sales: Salary $175,000 - Bonus $394,456
Wayne Rosing, vice president of engineering: Salary $175,000 - Bonus
$151,314
This is combined with text-matching techniques that compare search
queries with the content of web pages to help determine relevance.

"By combining query independent measures such as PageRank with our
text-matching techniques, we are able to deliver search results that
are relevant to what people are trying to find," said the documents.

Interestingly, the filing reveals that Google does not actually own
the patent to the PageRank technology.

Instead it is owned by Stanford University, where Google's founders
developed the technique.

Mr Brin and Mr Page hold an exclusive license to the patent until
2011, after which Stanford University could conceivably allow other
access to the technology.

Money matters

In the document, they spurn the traditional approach of Wall Street
which relies on regular earnings reports.

"Many companies are under pressure to keep their earnings in line with
analysts' forecasts. Therefore, they often accept smaller, but
predictable, earnings rather than larger and more unpredictable
returns.


A hard day at the office for Google's staff
"Sergey and I feel this is harmful, and we intend to steer in the
opposite direction."

Perhaps surprisingly, the pair are not the highest paid executives in
the company.

This honours falls to Chief Executive Officer Eric Schmidt, with an
annual salary of $250,000 and a bonus for the year of $301,556.

By comparison, Mr Brin and Mr Page get a salary of $150,000 and
bonuses of $206,556.

The quirky nature of Google's founders is even reflected in a touch of
geek humour.

The exact value of the planned share offering is US$2,718,281,828,
which coincidentally also corresponds to the mathematical constant e.

Looming challenges

Google is aware of the growing competition it faces in the search
engine market.


Google faces growing competition
It recognises that its main competition will come from tech giants
Microsoft and Yahoo.

Both companies are developing their own search technology, with
Microsoft looking to make search a more integral part of the Windows
operating system.

Google appears under no illusions at the potential threat to its
leading position.

"We expect that Microsoft will increasingly use its financial and
engineering resources to compete with us," said the filing.

"In addition to Microsoft and Yahoo, we face competition from other
web search providers, including companies that are not yet known to
us."

Faced with an increasingly cut-throat marketplace, Google appears
under no illusions about its future prospects.

"We expect our growth rates to decline and anticipate downward
pressure on our operating margin in the future," said the documents.

Even Google's own success may work against it in the future. The
company admitted that the widespread use of the word Google as a
synonym for search could work against it.

"If this happens, we could lose protection for this trademark, which
could result in other people using the word "Google" to refer to their
own products, thus diminishing our brand."

Bet some of them guys know about AA's quilting problem.