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Google More Cash Than It Knows What To Do With

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by Felix Salmon
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Apr 20 2007 12:00am EDT

Google: More Cash Than It Knows What To Do With

It's a good day to be Eric Schmidt: Google's earnings once again beat expectations, and even beat expectations that they would beat expectations, and the stock opened up $20 at $491 a share. Then news came out that Goldman Sachs had upped its price target on GOOG to $620. Even with earnings of $3.18 per share per quarter, that's still a p/e of 50, give or take.

When your stock is that strong, cash is cheap. My colleague Russ Mitchell wonders whether Google might have overpaid when it bid $3.1 billion for DoubleClick. I daresay that if Google was any normal company, the answer would be yes. But Google needs things to do with its cash, since returning it to shareholders would barely have any effect on the stock price.

Snapping up DoubleClick mainly to keep it out of the hands of Microsoft might be as good a use as any for the lakes of liquidity in Mountain View. Remember, Google's earning $1 billion a quarter these days. What else is it going to do with the money?

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