Full Text: Open Debate

GOOG is fueled by an unsustainable business model: The selling of ads against content that it does not own, that it has not compensated IP owners for and that it has no explicit legal right to exploit commercially. The "millions" of businesses and individuals "voluntarily" forking over their proprietary content and personal data to Google "every day," sell themselves and their assets short, while Google's market cap balloons.

Google's free ride is being challenged by content owners around the world. Google corporate AdWords customers are challenging Google's dominion over their own properties, protesting that Google has become a "toll keeper" on brand names.

If "search marketers aren't fools," then Google's growth is destined to slow, along with its share price.

Sullivan: Google's "free ride?" Flip it around. Google's the lifeblood of many sites, sending them huge amounts of traffic at no cost.

Google ads have made some sites possible economically, even allowing them to graduate to selling advertising directly. A miniscule number of content owners are seriously "challenging" Google. The vast majority are part of the Google ecosystem, riding the Google bus. That's entirely sustainable.

If you rent your land to a billboard company, is that company exploiting "content" it doesn't own? No. There's a partnership that both sides earn from. Google's an Internet billboard company, a pretty efficient one.

The real worry isn't that content owners will burn their billboards in protest at Google. Rather, they may seek other companies willing to pay more. That could slow Google's profits. But I still expect Google to find plenty of companies to rent it space, plus find space in new areas.

Bogatin: Google tells Wall Street it can find "new ways to monetize all the time," claiming no "obvious ceiling" to growth, its share price says otherwise, however.

GOOG trailed the S & P in 2006; Google shares appreciated 11% versus 14% gains for the S & P 500 index. In 2007, GOOG will be negatively impacted by a continued decline in the growth rate of Google's earnings per share. Analysts forecast a 36% growth in EPS for Google in 2007 ($12.63), versus its 78% rate in 2006 and a 172% rate in 2005. As Google's earnings growth slows, its share price to earnings ratio will also fall; GOOG's 2006 PE of 50 is likely to dip to 36 in 2007.

A GOOG 2007 fair value of $454 (36 PE X $12.63 EPS) is below its 2006 closing price. Bottom Google line? Search for a better investment opportunity in 2007.