GOOG forecasts it will run out of people which will slow growth
Merrill Lynch analyst Lauren Fine is the author of a report issued this morning on GOOG. The report says that Google CFO George Reyes spoke at the Merrill Lynch investor conference and was vague on a lot of questions. However, he did say that " that the law of large numbers will likely start to come into play."
Eric Schmidt described the law of large numbers this way: "But there is something called the law of large numbers. Eventually, you run out of people. It is not possible to know when that will be." (Washington Post story from May 13, 2005)
It's no wonder GOOG is playing nice with China--it needs its people to fuel its growth.
Also from the Merrill Lynch report:
. . .the CFO did say that new products will likely soon contribute more materially to the company's growth. Google Base will soon be fully searchable; Wi-fi projects are simply test cases right now; GOOG did, however, say that a payment processing services is a natural extension of its current payment services with Video Store and advertiser services and the Publication Ads service will see more publishers signed on.Investments Will Continue
As GOOG has historically said, it will continue to invest in its business. It has been hiring people at 50-60 people per week over the last couple years. Capex is also needed to keep up with capacity demands and as long as revenues continue to growth very well, they will continue to reinvest in the business. Capex is going towards both real estate and its technology infrastructure, of which much will go towards international expansion.
Merrill Lynch is neutral on the stock.
