Book Value vs. Market Value. This Business Week article entitled What's Google Really Worth? is an example of the challenge of estimating a market value for a company going public. The discussion explains how early estimations are based on comparisons to other companies in the indutry like Yahoo and ebay. They even use share-price-to-sales ratios and p-e ratios of these other comanies to try to bracket it's potential net worth. Other analysts give arguments as to why this might be high or low.

As a point of reference, Internet leaders eBay and Yahoo currently command share-price-to-sales ratios of 19 and 22, respectively. If Google is in fact close to the $1 billion in sales mark, then a $15 billion to $20 billion valuation is probably a reasonable estimation," according to an Oct. 24 research note by Renaissance Capital, which manages the IPO Plus Aftermarket Fund

Nevertheless, some experts seem to be looking at their price-earnings ratios to come up with a valuation for Google of near $25 billion. Yahoo has a p-e of 82.7, and eBay's is 55.9.

Prior to the Yahoo-Overture merger, the market figured Overture's forward p-e was 44.4. And Verity's is a relatively conservative 38.8, given that it's a high-growth tech concern. If Google's hypothetical p-e is more in the range of Overture or Verity, then its valuation would be much lower than the numbers now bouncing around Wall Street, experts say.

Maybe Google is doing better than anyone realizes in terms of revenues and profits. It hasn't yet made financial disclosures to the Securities & Exchange Commission, a mandatory step before going public. The best estimates now are that Google boasts revenues of around a $1 billion per year and annual net income in the $100 million-plus range.