http://www.internetoutsider.com/google/index.html if we will follow his logic and give GOOG generous estimation of 2 billion FCF its multiple MC/FCF is 120.9/2=60.45 with single digit growth of 9% in revenue Q2 over Q1 http://www.awadallah.com/blog/ such valuation is completely unsustainable. Plus all usual suspects to consider: click fraud (no single word on GOOG CC http://internet.seekingalpha.com/article/13986, YHOO started CC with its very important issue http://internet.seekingalpha.com/article/13811), SBC stock based compensation is not expensed fully 375-109 (Q1)-115(Q2)=151 million to eat from earnings into the second half, " ...growth rate in capex in 2006 will be substantially greater than the revenue growth rate for the year.", declining Operating margin to 38% (YHOO is 41%)
What is reasonable multiple: YHOO at the moment has 36.47/1.4=26! (1.4 billion in FCF is middle of the range confirmed in guidance on CC) and it is multi revenue stream business with stable subscription base of loyal customers.
For GOOG to reach "reasonable" valuation of 30 with MC 2*30=60 billion in the economy going into recession when advertising will be cut first stock price will have to fall to 60000/310=193.5
I will be generous: at 200 I will not short this stock.