By Ari Levy
Oct. 2 (Bloomberg) -- Google Inc. shares may surpass $600 for the first time as investors bet the world's most popular Internet search engine will capture more sales from companies shifting advertising spending to the Web.
Google, which began trading at $85 in 2004, has the sixth- highest stock price in the U.S. and has surged 27 percent this year. The shares rose $1.84 to $584.39 at 4 p.m. New York time on the Nasdaq Stock Market and earlier reached $596.81.
The search engine has taken users from Yahoo! Inc. and Microsoft Corp., pushing sales growth to at least 70 percent in each of the past three years. Google plans to lure more Web surfers and advertisers through the YouTube video site, bought last year, and has introduced software to sell mobile ads.
``Google is still dominating,'' Piper Jaffray & Co. Web analysts including Gene Munster said in an Oct. 1 report.
Munster, in Minneapolis, rates the stock ``outperform'' and estimates it will reach $660 within a year as Google parlays its lead in search into other areas of online advertising next year.
The Web advertising market in the U.S. will grow 29 percent this year to $21.7 billion and then more than double by 2011, according to EMarketer Inc. Ads linked to search results will account for about 40 percent of that, the New York-based researcher estimates.
The company bolstered its search engine in May by adding links to YouTube videos, images, book excerpts and news. Microsoft and Yahoo have followed in the past week with their own upgrades. Google also is counting on its $3.1 billion purchase of DoubleClick Inc., its largest, to gain sales in the display ad market. The deal still requires regulatory approval.
Google's Gains
Google's share of the Internet search market increased to 56.5 percent in August from 55.2 percent the previous month, according to Reston, Virginia-based researcher ComScore Inc. Yahoo fell to 23.3 percent and Redmond, Washington-based Microsoft dropped to 11.3 percent from 12.3 percent.
Warren Buffett's Berkshire Hathaway Inc. had the two highest priced stocks in the U.S., with the Class A shares trading at $119,799. The others above $600 are Seaboard Corp., a pork processor and cargo shipper, CME Group Inc., operator of the world's biggest futures market, and Washington Post Co.
In its 2004 IPO, the biggest ever for an Internet company, Google dodged U.S. investment banks and sold shares directly to investors. The so-called Dutch auction allowed smaller firms to bid for shares, giving the bigger ones less control over the sale.
Sharing the Wealth
Google's advance has made billionaires out of co-founders Larry Page and Sergey Brin, who started the company as Stanford University graduate students in 1998. Page, 34, and Brin, 34, each have shares valued at more than $18 billion. Chief Executive Officer Eric Schmidt owns over $5 billion in stock.
The company has a stock market value of more than $180 billion, the third largest among U.S. technology companies, behind software maker Microsoft and Cisco Systems Inc., the biggest maker of computer networking equipment.
While 33 of 36 analysts tracked by Bloomberg recommend buying the shares, the price forecasts suggest more skepticism. Of the 28 analysts with estimates, 20 have predictions below $625 for the next 12 months.
To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net
Source : Bloombreg
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