Google Earns

2 February 2005

Google announced blow-the-doors-off numbers today. For the year the company posted $3.189 billion in sales. That was more than double the prior year. Against those sales, they recorded a net profit of $399 million. That was almost four times the prior year’s profit.

Google employs just over 3000 people and has approximately 286 million shares outstanding. Profitability amounted to $1.46 per share and $133,000 per employee.

At a market price of about $191.90 per share, the whole company is valued at $54.6 billion. Invest your $192 expecting a five percent annual return, and the company is going to have to post earnings of $9.60 per share. They are on their way, but with a P/E of 230.37, well that’s a 1999 multiple!

For perspective consider that Berkshire Hathaway earned $4,134.48 per share during 2003 with a current share price of $90,850. That’s a P/E of only 21.97 by comparison. Invest your $91,000 and, to get a five percent return, the company has to earn only $4550 per share. Sometime in March we’ll know how they did against that target.

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