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Google becomes 'mission-critical'

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 20 Aug 2014
Investors who took the risk on Google shares 10 years ago would have benefitted handsomely.
Investors who took the risk on Google shares 10 years ago would have benefitted handsomely.

Google's debut on the Nasdaq - 10 years ago this week - reignited the fire under technology stocks at a time when the world was still recovering from the dotcom bomb that shook international markets four years previously.

Back then, the Google people knew - worth $23 billion on listing - was a search engine that also happened to offer e-mail. Now, it has become integral to people's lives as many cannot function without it and - as it increasingly seeks to invent the future - it will be a mission-critical part of business and home living, notes World Wide Worx MD Arthur Goldstuck.

The Internet giant, currently valued by shareholders at $397.33 billion, listed on 19 August 2014 at a share price of $85, raising just $1.67 billion. Currently, its stock is trading on the Nasdaq at $586.86 - giving it growth of more than 900% over the last decade.

Vestact notes that, in the past 10 years, revenue has grown from $3 billion to $66 billion, the number of Americans who visit the site has gone from 64 million to 236 million, and its cash has gained from $255 million to $61 billion, which is almost three times its original market capitalisation.

Heady returns

Google's share price doubled to $190 by the end of 2009 and, had investors taken the plunge then, they would have made five times their initial outlay when the stock went to $1 184. "These numbers are a great advert for the power of a high-growth stock, in a new sector ... Google is still one of my favourite stocks and a company that will continue to change the way that we go about our daily lives," says the writer of the Vestact research note.

Goldstuck says looking at the trajectory traced from where Google was at listing, to now, and then into the future, it is possible to imagine it will be a "mission-critical" part of everyone's lives. Google is on a mission to own the future, and is accelerating its spending spree as it seeks to enable a connected world, and applications that will plug into that future.

In total, since 2001, Google has bought 160 companies, with 57 of these buys coming in the last three-and-a-half years, at a rate of one purchase a week, according to Wikipedia. This year alone, the company has bought 20 entities, more than double what it acquired during the first half of the past two years.

Not just for nerds

Liron Segev, tech blogger and CEO of Swift Consulting, notes, in the past 10 years, Google has "become the glue that holds the Internet together", pointing to its development of aspects such as Gmail, Android and other services.

Google has done a lot of good with innovations in areas such as driverless cars, the Internet of the future and its software, says Segev. He notes it has opened up innovation, and de-stigmatised the "geek" aspect of development. "They changed the world; development is no longer a hobby for pimple heads."

The initial public offering accelerated Google's thinking and boosted confidence in the market because listing provides investors with security as they are able to "look under the hood" when companies report, adds Segev.

However, Google has not been without its detractors. Its latest plan to offer e-mail and YouTube to children has alarmed watchdogs, who are worried advertisers will be able to target kids under 13, undermining their privacy. Concerns have also been raised about targeted adverts inside Gmail, and its monopoly status.

Segev adds, with companies of Google's size, there will always be privacy concerns over aspects such as targeted adverts, or security issues, but this is the cost of doing business with Google, which offers many free services.

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