Zero to $400 billion, good for the second-biggest market
capitalization in America, took a bit more than 15 years of existence and less
than a decade as a public company. Not too shabby, Google (GOOG).
The new king of all media just supplanted Exxon Mobil (XOM),
an ancient conglomerate with multiples of its revenue, earnings, and assets,
for the No. 2 slot; Apple (AAPL) remains on top. In addition to search and
YouTube, Google does smart glasses, mysterious barges, renewable energy, and a
pre-World War II blimp hangar.
The Mountain View (Calif.) company totes at least $59
billion in cash and has had a hand in 127 deals totaling a little less than $18
billion in the past three years, according to Bloomberg data. In the past two
months alone, Google has taken out digital-thermostat maker Nest Labs for $3.2
billion and robotics shop Boston Dynamics. Last year, Google’s venture arm led
a $360 million investment in Uber, the car-booking app everyone is talking
about.
“The market is valuing their forward innovation,” says Colin
Gillis, an analyst with BGC Financial. Google’s sales growth last year of 19
percent is nearly half the clip it registered in 2012. Still, shares gained 58
percent in 2013 and have smoked the broader market and Nasdaq since their 2004
debut. “Everyone,” says Gillis, “is betting on multiple future revenue streams.
This is a market that loves to bid up promises. Look at Amazon (AMZN) and
Facebook (FB).”
So patient is the Street, in fact, that Google is getting a
pass for finally (and creatively) preparing a stock split for the first time,
more than three years after co-founders Larry Page and Sergey Brin first
broached the idea. They were concerned their supervoting status would be
diluted. Google’s inaugural split this spring will create a new class of “C’”
stock that carries no voting power. (One trader I spoke to called it a
“dumb-money tranche.”)
Story: Google's Giant $1 Patent Victory
Page and Brin chiefly own Google’s class “B” stock, which
accords them 10 times the voting power of each (traditional GOOG) Class A
share. Using that leverage, they exert control of 56 percent of the shareholder
votes, even though they own less than 15 percent of the stock issued.
A new class of nonvoting stock will enable Google to
continue compensating its workforce without thinning its founders’ clout.
Having your cake and eating it, too—easy when you’re worth $400 billion, buying
blimp hangars, and terrorizing streets with your driverless car.
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