Question: Google, Inc., operates the worlds largest Internet search engine. International Business Machines Corporation (IBM) is one of the worlds largest computer hardware and software companies.

Google, Inc., operates the world€™s largest Internet search engine. International Business Machines (IBM) is one of the world€™s largest computer hardware and software companies. The following data were taken from the companies€™ December 31, 2007, annual reports.

The following data were taken from public stock-price quotes.

Required
a. Compute the price-earnings ratios for each company as of March 3, 2008.
b. Which company€™s future performance did the financial markets appear to be more optimistic about as of March 3, 2008?
c. Provide some reasons why the market may view one company€™s future more optimistically than theother€™s.

Google, Inc. IBM Net earnings (in thousands) Earnings per share S4,203.7 $5.31 $10,418.0 $7.32 Stock price per share on March 3, 2007: $57.02 (Two months after the end of $114.23 their 2007 fiscal years.)

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