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Thu, Jan 05, 2006 - Page 12 News List

Google's star to keep rising: analyst

SKY HIGH One industry watcher predicted that the Internet giant's stock price will reach US$600 by the year end as its advertising revenues keep on climbing

AP , SAN FRANCISCO

Google Inc's new year is picking up right where last year left off -- with ever-loftier expectations for the company's soaring stock and a feverish guessing game about the online search engine leader's next big move.

Confident that Google will double in size during the next two years, Piper Jaffray analyst Safa Rashtchy on Tuesday issued a research report predicting that the company's shares will hit US$600 before this year is over.

The forecast makes Rashtchy the first prominent securities analyst to set a US$600 target for Google's shares.

"I am not trying to be heroic or controversial," he said during an interview. "I just thought that I should start the new year by trying to figure out what looks like a fair valuation."

The optimistic outlook helped lift Google's shares US$20.37, or 4.9 percent, to close at US$435.45 on the NASDAQ Stock Market. The shares have traded as high as US$446.21 since being priced at US$85 in an August 2004 initial public offering.

anticipation

Meanwhile, Google's allies and foes alike are trying to figure out what company co-founder Larry Page might announce tomorrow when he is scheduled to speak at a huge consumer electronics trade show in Las Vegas.

A published report suggesting that Google is planning to sell a low-priced personal computer through Wal-Mart stores stirred some excitement but company spokeswoman Eileen Rodriguez shot down the speculation on Tuesday in a prepared statement.

"We have many PC partners who serve their markets exceedingly well and we see no need to enter the market," Rodriguez said.

Analysts nevertheless believe Google is planning to unveil a significant new initiative during the trade show.

The most prevalent guesses center on a Google computing device that will make it easier to link the search engine with television and more software products aimed at undermining one of Google's biggest rivals, Microsoft Corp.

prosperous

Even if Google doesn't push into new frontiers, the company is expected to continue to prosper as the worldwide market for search engine advertising continues to grow from an estimated US$10 billion last year.

Rashtchy expects US$33 billion to be spent by 2010 on search engine ads, with most of that money flowing to Google.

If Google's shares reach US$600 this year, they will have to appreciate by about 45 percent -- a deceleration from last year when the stock more than doubled from 2004's closing price of US$192.79 per share. At US$600 per share, Google's market value would exceed US$170 billion -- more than all but a handful of companies.

Based on his latest projections, Rashtchy expects Google to earn US$2.7 billion on revenue of US$9.3 billion this year followed by 2007 net income of US$3.7 billion on revenue of US$12.6 billion. Google won't report its official results for last year until later this month, but analysts believe the company made about US$1.5 billion on revenue of roughly US$6 billion last year.

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