Internet Stocks

The Big Internet Companies Are Here To Stay

If one theme came out of this earnings season it is the big Internet players are for real and they are here to stay.

eBay (EBAY), Amazon (AMZN) and Google (GOOG) all reported results that show that their business models are sustainable. Even Yahoo (YHOO), which continues to struggle, has value as a takeover candidate.

eBay for 2006 reported $6 billion in revenue, up 31%. It bought back $1.0 billion in stock and announced it would increase the buy back to $2.0 billion. This is the first big stock repurchase program in the company's history.

Amazon forecasts revenue to exceed $13 billion up from $10.7 billion in 2006, a 21% increase. Amazon looks to earn $355 to $505 million in operating profit next year.

Google's revenue grew 67% in the fourth quarter and earnings for the quarter reached $1.0 billion. That means, unless something goes terribly wrong, Google will earn over $4.0 billion next year. I think Google will be around for a while.

For most of the 1980s and 1990s investors did not believe Microsoft, Oracle, Intel and Dell would grow to the size they have become. When companies become dominant players in new industries, it is often best to go with the trend and ride these stocks for the long haul.

Ten years into the Internet, the results reported by eBay, Amazon, Google and even Yahoo, show that the industry and these companies are for real.


February 2, 2007