Just my 2 pence, but I wouldn’t touch this with the proverbial bargepole. It’s a classic “jam tomorrow” stock, as Britons would call it.
Firstly, it doesn’t meet my own investment criteria, as I’m building a high-yield portfolio and page 31 of the IPO registration statement filed to the SEC by Google notes that the company has never paid a dividend and has no plans to do so. Sorry, but I need something in return for taking on the risk of holding a stock in the first place, and I prefer to take that compensation in the form of a nice, fat dividend yield.
Secondly, I am no fan of two-tier shareholder structures such as the one Google is planning to set up. (The company will sell two types of stock, Class A and Class B. The Class B stock, to be held only by Google managers, will have 10 times the voting rights of the Class A stock.)
I understand that the company’s founders intend this as a way of insulating themselves from Wall Street’s preoccupation with quarterly earnings. I agree with their viewpoint and feel that it would be perfectly adequate for U.S. companies to follow the British practice of publishing full results at the half-year and end-of-year stages and otherwise issuing periodic brief updates on their business. However, the reality is that U.S. companies do report on a quarterly basis, and while it’s admirable that Google wants to do something about that, IMHO the company’s founders could have found a better starting point than a blatantly discriminatory ownership structure.
Finally, while I am aware that Google is a profitable business, technology is an area with low barriers to entry. (That is, it’s not very hard for would-be competitors to start new search engines in an attempt to eat Google’s lunch.) As the company notes in the 20 pages of risk factors in its SEC registration, it faces “significant competition” from Microsoft and Yahoo, who will not be standing idly by while Google takes over the world, to say the least. And the low entry barriers in technology mean Google’s eventual nemesis could be a company that doesn’t even exist yet. Remember, Altavista (who dat?) was once flavor of the month too.
All the above is, of course, just MHO, but with the Federal Reserve clearly signaling (in my view) that the next move in U.S. interest rates will be upward, I’d say this is no time to be buying non-dividend-paying stocks of businesses that already acknowledge significant competition in an industry where it’s not very hard for new rivals to enter the fray. YMMV.