CNET's Molly trying to argue the online giants aren't that profitable... CNET #8

The latest back and forth is CNET Molly Wood trying to make the case that the online giants aren't so profitable. Why oh why did she want to take the debate in the direction that undermines her case the most.

My source is Mary Meeker Queen of the Internet
Posted by Scott Cleland (See profile) - July 14, 2006 12:22 PM PDT

No need to back down here.

My source for 80-90% gross profit margins for Google, Yahoo, eBay, and Microsoft -- is Mary Meeker,of Morgan Stanley, who is a leading analyst and authority on Internet and Internet related stocks, and (also dubbed "Queen of the Internet" by the media). She presented these figures as part of a financial presentation to the Warburg Pincus annual conference on May 18th, 2006.

Specifically, Mary Meeker presented gross margins of 89% for Google, 87% for Yahoo, and 82% for both Microsoft and eBay.

Most would consider Mary a very credible source for these type of figures for a variety of reasons. First, she was presenting to a very sophisticated financial/investment audience (and her clients) -- who would easily know if her numbers were off base. Second, she probably has more financial experience with the actual profitability of these companies that any other analyst becuase of the leadership that Morgan Stanley and herself have had in being an investment banking leader in this industry segment over a decade. Lastly, in the post Global Settlement era of Sarbanes Oxley restrictions on security analysts, there is no evidence to suggest that her numbers are off base.

Your beef is with Mary, Morgan Stanley and the exceptional profitability of these companies -- not me.

Have fun with your armchair financial analysis competition with the top Institutional Investor recognized financial analyst covering these companies. You appear to be out of your depth again.

Moreover, do you really think it is a wise tactic to take the debate in a direction that only reminds everyone that this whole NN debate is really about protecting the margins of the online giants? The more we debate margins all your readers will conclude this is just a fight between the rich and the wealthy companies which is exactly my point.

This is a public debate over the wholesale pricing of video delivery between about a dozen companies. You and a bunch of people have been snookered into thinking it was about Internet freedom and the First Amendment.