It’s young, it’s hip, it’s hot. And now Google, the company that transformed the internet search, has fueled a new high-tech fever by delivering blockbuster financial results.
In results released on Tuesday, the Silicon Valley company said it raked in over a billion dollars in the most recent quarter and multiplied its profit by seven.
Google’s stock price surged another 10% in midday trade on Wednesday to 211,86 — more than double its initial public offering price of $85 less than six months ago.
”We believe Google is executing better than any company in the internet sector right now,” said Jordan Rohan, analyst at RBC Capital Markets.
”The company is gaining share within the search sector at a strong pace and appears to be leading the industry in increasing both monetisation and search frequency.”
Many analysts are jumping on the Google bandwagon, raising price targets in a move reminiscent of the 1990s dot-com boom.
Goldman Sachs analyst Anthony Noto put a $265 target on the stock, raised his 2005 earnings estimates for the company by about 25%.
”We recommend investors buy Google shares,” Noto wrote.
Credit Suisse First Boston’s team of three analysts slapped a $275 price target on Google shares, saying that ”Google is the best way for investors to play the growth in online advertising.”
”They had strong unit growth and better pricing. It’s tough to find any near-term negatives,” said Martin Pyykkonen, an analyst with the research firm Janco Partners.
But the analyst said the company’s share price may be unable to keep on its red-hot pace.
”It’s more a question of valuation,” said Pyykkonen, who rates Google shares ”market perform” and doesn’t own any.
”They’re priced to perfection, but so far they’ve delivered.”
The stock surge gives Google a market capitalisation of nearly $58-billion, more than twice that of General Motors, and leading internet sector rivals Yahoo, Amazon and eBay.
The internet search leader posted a net profit of $204,1-million compared with $27-million in the same period a year ago.
Revenues meanwhile topped one billion dollars for the first time since the company begun in 1998 — $1,032-billion for the quarter ended on December 31, up 101% year over year.
”Google had an exceptional quarter. Revenues and profits increased significantly, our execution was solid across the company and most importantly, our relationship with our users, partners and advertisers became even stronger,” said Eric Schmidt, Google chief executive officer.
”All of this happened while we continued to innovate, expand around the world and make strategic, long-term investments.”
Google’s search engine is the world’s most used, running hundreds of millions of searches a day. Google also licenses its technology to scores of companies, including internet service provider America Online.
Its information base includes billions of web pages and it is expanding is offerings to include desktop search tools and the cataloguing of millions of library books.
For Wall Street, however, Google’s innovation has come in what is known as paid search listings — or keyword advertising — allowing an advertiser to direct an ad to a web user based on the type of search conducted.
Google still leads the the US search market but that its lead is diminishing, according to market research firm comScore Networks.
The figures showed Google with a 34,7% share of the search market in December, down from 35% a year ago. Yahoo meanwhile grew to 31,9% from 27,1% and Microsoft to 16,3% from 15,4%.
Another firm, Keynote Systems, ranked Google at the top of search engines in customer satisfaction.
”Google is the king of customer experience in the search engine industry, but Yahoo, MSN and Ask Jeeves are improving,” said Bonny Brown, director of research and public services for Keynote.
”Given the open nature of the web, as these sites continue to improve the user experience they will undoubtedly begin to attract more users and improve user loyalty. Obviously this will impact the advertising side of the business.” – Sapa-AFP