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Act going for a thank you -- Google shares are down today after BMO capital markets took -- unusual.
They've downgraded the stock while the worst thing in the world it downgraded it to a market perform but the analyst behind that call -- salmon.
We invited him to come on today because it's a little unusual there aren't many if any negative calls on this one but less than two hours before the show -- Debt backed out because he didn't want to defend his call against my next guest yousef's Wally who says -- called was quote.
Ridiculous so let's recap what's behind -- Google downgrade first he says the valuation is too high he used -- like -- but now.
PE of seventeen it's too rich the market has become comfortable with the cost per click decline.
And the benefits Google is getting from apples fall are coming to an end so we.
And a justice equality coop just thought that the call was ridiculous.
Are you that you had such a visceral reaction to day of seven's call.
Well for a couple things for so long in if you look at the stock over the last 34 years it really hasn't done all that much over the last couple of for five months it has seen a nice run up and that's true but at the same time it has caught hasn't even caught up.
With the rest of the Internet universe if you look at our Internet universe -- up something like.
98% over the last five years Google over that same period is -- maybe 20/20 5%.
So that's number one number two if you look at the valuation in of itself the stock may be trading at 1617 time PE.
And adjust that for cash and it's actually trading around twelve times -- third.
OK well what you just -- these children and get -- -- -- 500 ultimately set -- up for cash Google has about 48 billion in cash that you're saying if you.
Squeezed out the cash put it -- that you get a much lower PE that you feel you're comfortable with correct.
Correct history about the -- you get to you about twelve to thirteen which adjusts it for growth -- gu who's grown much faster than the S&P 500.
Then you're getting -- cheaper stock and the market I think that's that's cheap.
OK let me take downside since he.
Since he stood me up.
I think having pretty nice but -- Did says -- and I wouldn't disagree with him on this Google has not at least -- into the market that it -- in a more exciting way.
Its big purchase of YouTube.
And I was thinking because we've been talking about the baby horse Budweiser -- -- commercial.
Six point three million hits on that commercial alone on YouTube I just checked and I made at the six point 351.
-- you know comma 1019.
The person -- to watch it because it's such a good commercial but I don't really see how -- monetizing that.
If they were people to do that in a better way why not then take downside of it say what -- they do enough.
Well one of the problems is Google doesn't tell you how much they're making that -- YouTube they're not even -- they're telling how much they're making out of display advertising.
In general also we're left to read the tea -- and -- when we do.
We're coming up -- display advertising in general the biggest portion of it being YouTube account and for somewhere and 8910%.
So this is a business they acquired five years ago we think it was doing a couple hundred million dollars.
We think it's doing in excess of a billion dollars right now so they are monetizing YouTube they're just not telling us.
Something -- -- for them to tell us especially when it's a publicly traded company let me quickly get your sonong Marisa Mayer leaving.
And -- you left Google was -- loss I I hear honestly didn't different sides of this some people say while she's extraordinarily intelligent.
-- lot of trouble getting people to work -- her over their Google and that it's not it's not met that really any big issue that she left there.
I think Google is is bigger than Murray said I think it's bigger than.
I'm Tim Armstrong who left to go to AO well I think.
The company has now been very very deep bench of executives I we actually cover Yahoo! and we think Murray say is that great great win for Yahoo!.
But I don't necessarily think that our view of Google is gonna change just because Tim left three years ago or because -- some left last year.
But you've seen up scary to me -- but canned salmon didn't wanna you can be anywhere Miriam all right well Dan -- was when I got up up up.
It's always welcome -- out of -- his position but is of great to have you thank you so much for joining us here at not backing governor appreciate it.
It's it's Wally is Cantor Fitzgerald managing director and he thinks it Google is a big -- here.
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