What:
At the Future in Review conference in California last week, Google Inc's (NASDAQ: GOOG) Vice President and Chief Internet Evangelist, Vinton Cerf, suggested that we are only at the beginning of the way the internet is reshaping the way we do business, live and work.
So What:
Given that he is widely known as one the "fathers of the internet", our investing success may be largely determined by this intersection of technology and the economy.
The implications have already been profoundly negative on some Australian portfolios that held retailers including Myer Holdings Ltd (ASX: MYR) and Harvey Norman Holdings Ltd (ASX: HVN) and the media company Fairfax Media Limited (ASX: FXJ).
Losses incurred here would have been overcome by investing in the disrupting technologies employed by new business models. When we look for a house it is on the website realestate.com.au, owned by the digital advertising business REA Group Limited (ASX: REA), which operates 13 websites around the world. In purchasing a vehicle we scan Carsales.Com Ltd (ASX: CRZ) and search for employment via SEEK Limited (ASX: SEK).
Now What:
In a review of the Australian online sector, broker UBS deemed REA Group Limited to be trading at fair value. Seek, Carsales and the underperforming Trade Me Group Ltd (ASX: TME) were the most overvalued. However, I would be snapping up all but Trade Me on a downturn, as I don't believe broking analysts factor in enough upside for internet companies with first-mover advantage.
The New Zealand-based classifieds business and online marketplace Trade Me was singled out as both expensive and having limited earnings growth.
