Of Google, Capitalism and Omid Kordestani

There was an interesting internal discussion today which centered on the fact that at $300/share, everyone's favorite Google is valued roughly at $70 Billion/USD. This is more than GM and Disney combined, measured by GDP an independent naiton of Google-astan (or Googlia) would rank in the top 50 wealthiest nations on earth.

The question is whether such a rich valuation is justified; as everyones favorite Jeremy Grantham recently noted “If profit margins aren't mean-reverting, then capitalism is broken.”

Well, there is a tidbit of what insiders of Google actually think about the situation. Mr. Omed Kordestani, a senior VP of stuff at Google, has recently (June) sold almost 43% of his internal stock. And cleared cool $259 million for doing whatever the senior VP's of stuff are doing.

Unlike the general investing public which tends to actually purchase their stock on the open market, insiders such as Mr. Kordestani are given said stock options from the big black magick hat, out of the thin air they come and into the frenzied markets they go. No personal funds of Mr. Kordestani are involved, nor does he have to take any particular risks, except for obviously the risk of not selling out.

$259 Million is a great vote of confidence in the company, its direction, valuation and serves as a hint of what smooth market operators think of capitalism. It ain't broken. It is merely full of hot air and will come down crashing, similar to countless other dot-has-beens.


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On iPod: Tomorrow Doesn't Matter Tonight 3:44 Jefferson Airplane Hits (CD 2) Rock 1 2/19/2005 10:54 AM