How Google profits from “free”

Article Excerpt

Google has become one the world’s best-known brands since it was formed in 1998. For many Internet users, the Google search engine is the only way to find information online. Under Google’s business model, it gives away most of its products and services for free, then makes money by selling ads. Google is drawing advertisers away from traditional print and TV ads, because it is able to help advertisers zero in on potential customers. We feel Google still has plenty of growth ahead, particularly as it has only begun selling ads on its newer services, including its YouTube video-sharing site and Google+ social network. Moreover, the stock trades at only 16.9 times earnings. That’s cheap in light of the strength of Google’s brand and its vast growth potential. GOOGLE INC. $523 (Nasdaq symbol GOOG; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 322.9 million; Market cap: $168.9 billion; Price-to-sales ratio: 5.0; No dividends paid; TSINetwork Rating: Above Average; www.google.com) is the…