Posted on: Saturday, January 1, 2005

Google shares end year at $199.88

By Chitra Somayaji qnd Cecile Daurat
Bloomberg News Service

NEW YORK — Shares of Google Inc., the most popular service for searching the Web, ended 2004 near $200, capping the stock's debut year near its record price.

Google shares have more than doubled since the company's initial public offering at $85 per share in August. The stock fell $4.81 to $192.79 yesterday afternoon after touching $199.88. They hit $201.60 on Nov. 3.

The rise has given Google a market value of $53 billion and an estimated price-to-earnings ratio of about 76, more than triple that of Cisco Systems Inc., whose equipment underpins much of the Internet.

"The growth of the Internet will continue to propel their revenue as we go forward," said Alan Loewenstein, who manages $420 million at John Hancock Advisers Inc.'s technology fund in Garden City. "The business is doing very well, but the negative is the tremendous overhang on the stock."

Scarcity of the shares may have contributed to the stock's rise after the Internet-based auction that helped set the IPO price. Google and investors sold 8.3 percent of the shares to raise $1.92 billion as the company fought Yahoo! Inc. and Microsoft Corp. for Web advertising dollars.

Microsoft shares have dropped 2.4 percent this year, while Yahoo has gained 67 percent.

Of 25 analysts tracked by Bloomberg, 13 rate Google stock "buy," 11 "hold" and one "sell."

They've accomplished something extraordinary and investors have come to appreciate it, but the full value has not yet been created," said David Garrity, an analyst at Caris & Co. who rates the shares "buy" and doesn't own them. "There's more to come."