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January 23, 2008
Internet Stock Productivity: Who's the Fairest of Them All?
Useful chart from JPMorgan analysts today comparing major Internet stocks on the basis of per-employee productivity on a revenue/person basis:
JPMorgan uses the chart to make the point that Yahoo has considerable room to improve, reinforcing the layoff argument.
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Paul - looks like the market didn't agree with your GOOG call. It's off 10% today already...
Anyway, this chart is pretty silly. I'd use Operating CF or FCF per employee instead. Google and Amazon have essentially the same number of employees, but GOOG generated 2.9b in free cash over the last twelve months while AMZN generated only 800mm. Are Amazon's employees really more productive?
Paul, I would have to agree with Kyle S. Revenue per employee is an average proxy for productivity. Applying the ttm EBITDA to the employee data above ranks Google top with 353k per employee ahead of eBay (161k per employee) and Yahoo third with 104k per employee approximately twice that of Amazon (52k per employee). I think using comparative evidence such as the table above can be misleading but it does highlight the power of Google's business model and it's ability to scale.
Boy, don't let those Amazon employees get hold of this or they're all gonna ask for raises.