The New York Times has an article that goes on at great length about who stands to make money from a Google public offering, and the last line illustrates perfectly why I'm not going to be buying any shares myself.
Andrew Anker, an entrepreneur and former venture capitalist, said: "This is the deal of the century as far as I'm concerned. No matter how you cut it, this will make a lot of people very happy."There are apprently hundreds of rich, famous, powerful people who stand to make a lot of money if Google goes public, and the connections of those people are probably driving the valuation of the company more than its actual merit.
Google is a good company, but as many others have pointed out in the past they occupy a very precarious position. The only reason the company makes money is because they're the premier search site on the internet... but think about that. As soon as some new search technology comes around, wham, Google is dead. There's no way to build brand loyalty with a product like search results. If a competitor develops a better search algorithm that delivers more accurate and relevant results, they're only a couple of keystrokes away from replacing Google in the world's shortcut menus.
Unlike other software service providers, such as Microsoft, a user can switch from Google to another search engine for free almost instantly. There's no tie-in, no investment, and no reason to stick with Google once it falls from the top of the heap, as it will almost certainly do.
Everyone knows this, so what makes the company's modest revenue stream so highly valued that an IPO would "instantly make Google worth more than Lockheed Martin, the big military contractor; Federal Express, the package delivery service; or Nike, the sports clothing maker"? Only one thing: the power of the investors who want the company to succeed. Google is the last, dying gasp of the Internet Bubble, and the real suckers are the people who are drooling over the chance to buy up stock from the existing private shareholders.