If I ruled the world -- or more accurately, if I had the controlling stake in Google -- what exactly would I do with the fruits of my hard work and good fortune?
Considering the company's
performance and its mega-achievement of breaking through the $600-a-share barrier on Monday, it's a fun question to ponder. Joe Mandese's article yesterday
puts Google's current status and value into clear perspective. At a market
cap of $190.28 billion (as of close of business Monday), Google has a higher market valuation than Time Warner, Disney and News Corp combined (admittedly there's only a couple of billion in it, but
loose change is important when batting around these kinds of numbers).
Not only that, but for those concerned about Google "intruding" into the advertising industry (whatever that means),
it's even more interesting to note that not only does it outweigh the media owners, but it towers over the valuations of any of the ad agency holding companies -- even WPP's $17.72 billion. When you
add together the market valuations of WPP, Omnicom, Publicis, Interpublic, Aegis, Havas and MDC Partners, Google was still worth 3.6 times as much as of Monday.
All this is of course deeply
irritating to those of us that didn't snag a fistful of Google shares at the initial offering, but such is life. Perhaps we can console ourselves (albeit churlishly) with the recollection that when
Yahoo was flying high and exceeded analysts' expectations, it found itself marked down for not exceeding them by a large enough margin - the logic of which never quite convinced me, but then I'm not
an investment analyst.
Despite all of the warm feelings that must be shared by shareholders and management alike in Google-land just now, there is a problem that comes with having access to
the kind of spending power that a valuation of almost $200 billion brings. Namely, people expect you to spend it. The investment community, for a start, tends to get edgy about companies that sit on
large piles of cash that could otherwise be used (and better used in their eyes) on little things like acquisitions.
To date, Google has maintained a very healthy level of R&D spending, the
fruits of which we've seen in a number of forms, most of them showing good returns for the business. It's a safe bet that the R&D isn't about to be switched off anytime soon. Along the way, there
have also been some acquisitions, most notably YouTube, which -- even at its $6 billion-plus price tag -- begins to look like relatively small change for the behemoth that is Google.
which leads to my question. If you were Google and you'd decided on your R&D budget but were going on a shopping spree, to set the stage for the kind of growth that Wall St is now expecting and
projecting (targets of $700 a share have already been set), where would you be shopping? Bear in mind you have enough spending power (and a culture of innovation and successfully applied visionary
thinking) to have a massive impact on how the business of communications is done -- be it conventional TV, the Web, search, advertising, planning and buying, you name it. Where would you start?
Would you be looking to buy a media conglomerate or an agency holding company -- maybe both? Is there some other route you'd take first?
Just as a prompt, here are the market caps
of the candidates mentioned above as of Monday:
Time Warner: $71.23bn
Walt Disney Co: $68.50bn
News Corp: $49.00bn
Admittedly the lawyers would have a field day dealing with potential antitrust suits in many of these transactions, but forget about that for now -- have some fun imagining how much
creative disruption you could cause if you had the helm at Google and you wanted to have your way with the future of the communications industries. Go megalomanic for a few minutes. It's probably as
close as you'll get to doing it for real.