"Don Dodge, a Microsoft manager who works outside of the company’s search group, made this argument in a post on his personal blog last month: “Why 1% of Search Market Share Is Worth Over $1 Billion.” Mr. Dodge reasoned that 1 percent of the 7.3 billion searches performed in the United States in March, multiplied by 12 cents in advertising revenue per search, would yield annualized revenue of $105 million. Assuming a market cap that is 10 times revenue, his arithmetic leads to a billion-dollar company."
These numbers are pretty unbelievable, right? However, I began to think, if Google has 55% market share in search, wouldn't that value their search business at $55 billion? Where is the other $110 billion in value (assuming their market cap is $165 billion, which I just checked on Yahoo!)?
Just a thought. Don't know if the statement from Don Dodge is 100% accurate, and I don't have the time to do the due diligence. But, some investors must think 1% market share is worth more than $1 billion.
Just a thought. Don't know if the statement from Don Dodge is 100% accurate, and I don't have the time to do the due diligence. But, some investors must think 1% market share is worth more than $1 billion.
No comments:
Post a Comment