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Thursday, October 02, 2008

Eric Schmidt debates Google's Future with Jim Cramer of Mad Money

Jim Cramer talks Google with Schmidt

Occasionally, I tune into CNBC to watch Jim Cramer rant and rave on Mad Money Yesterday, he spent 10 minutes with Google CEO, Dr. Eric Schmidt, for a rapid Q&A session. The stark difference in their personalities was amusing in itself. Cramer,with his bouncy,loud and emphatic style, versus the calm,cool and pensive Schmidt, who reminds you of a college professor.

Cramer voiced a concern that's probably weighing on the minds of investors across the world- Has Google hit its peak? He also reflected on comparable corporations such as IBM and Microsoft, who appeared to be invincible at one point, but ultimately hit their peak and stalled.

I worry there is a price where Google simply cant get any better.When I first started trading IBM and Microsoft , I thought they were untouchable.

Schmidt insisted that Google is immune from a similar fate because they're still enterprising and starting new projects, I.E., Trends, Earth,Android,etc.

These companies hit an "s curve" after rapid growth,and they stall because they can't grow anymore. The way you address that s curve slowdown is you keep adding other businesses. This is an advertising generation and advertising is now a multi-sector thing.

Fortunately Cramer immediately challenged Schmidt's formula and asked how Google's ambitious model for expansion won't earn the same stigma that Microsoft developed when the government attacked them as a monopoly.
Schmidt's reply? He used the pending advertising agreement with Yahoo as an example of Google's fair approach to business. He also boasted the benefits of  Youtube, which should prove to be an asset,regardless of the outcome from the online ad revenues. According to Schmidt, it's all about traffic.

Eventually we'd like to make some money out of it, but even if we dont', so many people come to Youtube that they ultimately go to Google and do google searches and go to google ads, since its such an enormous success globally we know we'll eventually benefit from it.

As for the future of Android, Schmidt refused to give any projections, because "the phone hasn't shipped yet,and he reiterated the point "it's software, and our  goal is to get lots of people to use the software to build a different platform."

I think Cramer's opening questions and concerns were valid, but I also agree with Schmidt's point that Google is still aggressively pursuing ventures and projects that should ultimately produce innovative ideas and valuable partnerships to keep them on the track toward the next tech breakthrough.

By Matt O'Hern at 11:54 AM | Comments (0)

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