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Google To Conquer Brick Media After CyberSpace?



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Nov 25 2006
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I think Google (Nasdaq : GOOG) is lucky, very lucky indeed to be born after Internet Version 1. After the burst of Internet first generation, only a handful can claim victory to be able to surf passed the giant tsunami. The rest of the dotcom startups are either folded or still licking their wounds, till today. Employees who became instant multi-millionaires due to stock options are either happily counting their cash or still hanging to their normal office hour job – simply because they didn’t exercise their options.

While Google is getting “Bigger” and richer with market capitalization of a whopping $ 155 billion, it is learning from mistakes committed by earlier Internet first generation companies such as Yahoo (Nasdaq : YHOO). Paper wealth will evaporates if not turned into hard-cash or used to purchase brick and mortar business which will never “fold their tents” and disappear overnight (such as virtual store).

Yahoo used to be the proud owner of $ 150 billion in paper wealth during the peak time of dotcom boom. It could be naive (can’t blame them as the wealth came just too fast and easy) for the founders to think the wealth is permanent. As fast as it came, it disappears with the same speed with current wealth worth only at about $ 40 billion.

Hence any serious investors can tell how all the C-level officers from Google including Larry Page, Sergery Brin and Eric Schmidt have been consistently selling their shares to realize their profit.

As much as online advertising is generating the bulk of the main profit for Google, the latest move by Google in putting its’ feet into brick & mortar media should give hints of where it will spend it’s huge war-chest in the next acquisition (YouTube being the latest purchase).

Google has started selling advertising space in 50 top newspapers, making it easier for companies advertising online to also show off their products in print. A group of more than 100 Google advertisers will be placing bids for space in newspapers owned by The New York Times Company (NYSE : NYT), Gannett (NYSE : GCI), the Tribune Company (NYSE : TRB), the Washington Post Company and Hearst during a three-month test period.

Executives downplayed any risks of letting Google handle their relationships with advertisers, instead welcome it as a way to increase their struggling sales.

While its’ team is experimenting with the media advertising, are the top management quietly drafting the plan to buy over any of these media companies? According to BusinessWeek, New York Times only worth less than $ 4 billion while Times management is having problem with its’ shareholder to buck-up or else – the asking price for a new buyer could be worth less than $ 7 billion. The treasure of Times however is the invaluable 155 years of content archives.

It looks like Google has the same characteristic of Warren Buffett in the sense that both have too much wealth and need to do some spending. The only difference is – Warren is cracking his head in finding good and potential companies to buy but Google has too many choices to choose from.

I won’t be surprise if Google were to announce another acquisition into print medias (Rupert Murdoch is watching) simply because it needs to have a safety net on brick and mortar business as supplementary as well as to ensure its’ stock price continue to climb.

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