Hi Martin,

>Hi, Jim.
>
>>But no matter how I slice it I see a company that PRODUCES nothing tangible yet priced at ~$500.
>
>What do you mean with producing nothing? Are you plainly obliterating the value of services as a whole?
>
>Just for the recors, in my head, Google produces the more wide and relevant search over the Internet pages, images, Books (this one is for me an incrdible value), Academic papers, maps, and many more things. It also produces value with Gmail, Calendars, Docs & Spreadsheets and other applications by providing tools for people to do its work faster and more colaboratively.

I don't see anything of what they 'produce' as being "theirs". Every bit of stuff they list (99.9%) is someone else's.
How much revenue does Google make from Gmail etc?
A fast wide search does indeed have value to users, but that's just their "hook" to place advertisements. Their real "value" apparently comes from the capabilities they have for ad choice/placement.


>
>Following your criteria I should say that Microsoft produces nothing (does boxed software count differently than online software?). And what can we say of the Universal Thread?

UT does not sell at $500. per share. Of course MS produces something - they SELL their software, whether in boxes or as downloads.


>
>Advertising itself -something that I'm not very fond of, either- is an activity that produces economic development, by letting people searching for a product get to know some sellers. Now, in that sense, what we tipically hate about advertising is that it constantly bombard you with information you have no use for.
>
>Then comes Google and finds a way to present you with ads that are 1) very relevant to the subject of your interest (whether you are searching or looking a web page with adSense) and 2) have the least possible disruptive presentation: plain text in a narrow column.

Right. And those 2 things make it worth $500. per share!
If you took advertising out of the U.S. economy there would be millions unemployed. Are all other advertising-related agencies not worth somewhere near $500 per share too. Does Google have more than 1,000 staff total?... Are most of them in their accounting department?

>
>The result so far was that the success rate of Google ads is highly effective, so advertisers have a best return in its investment, and consumers are less annoyed with the ads, as proven by the huge proliferation of adSense all over the Web.
>
>This is just the most basic part of the Google "model", and it really makes sense for me, and for the most part of this (granted) hysterical beast called "the market".

It still looks to me that investors are hanging far far too much weight on those few (2?) factors, making it look like another case of market hope driving market SENSE.

cheers
>
>Regards,