Investors stock up on Google ahead of hot quarter
Investors think Internet powerhouse Google is going to have a killer holiday.
Google's highflying stock topped $600 for the first time Monday. Investors are "excited about the holiday quarter, historically Google's strongest, and they buy ahead, on anticipation," says Gene Munster, an analyst at equity firm Piper Jaffray.
In the past few months, Google has been on a tear to expand beyond its core text advertising that appears near Internet search results.
The company recently announced a test program to put ads in YouTube videos. On Monday, it said it will begin syndicating ad-supported video content Tuesday to bloggers and Web site publishers in its AdSense network, after a trial earlier this year. That means that Web sites can post content from a host of companies, including TV Guide and Ford Models, and share ad revenue with Google when people click to view.
Such moves have investors jazzed, says Munster. "What Google will do" in the future "is multiple times more exciting than people can even imagine," he says. "They're going to take search and make it even better."
"Google is a company and a stock that has delivered," says Scott Kessler, an equity analyst at Standard & Poor's.
There's been much speculation in the blogosphere - unconfirmed by Google - that it is working feverishly to introduce its own mobile phone later this year. Google has confirmed that it sees mobile as the next frontier and that it wants to be a major player.
Munster doesn't believe Google will launch a phone. He thinks the ambition is a suite of Google software that will be offered for free to handset manufacturers, enabling another avenue for Google ads.
The company is also working on bringing its ad network from the Internet to TV, radio and newspapers.
Google reports earnings next week. While the third quarter tends to be weaker (most of Google's ad sales are in the first and fourth quarters), analysts are upbeat. Munster predicts Google will report revenue of $4.1 billion, up from $3.8 billion in the second quarter. He sees fourth-quarter revenue at $4.6 billion.
Kessler at Standard and Poor's expects Google's earnings to be up over 50 percent from a year ago.
Google stock closed at $609.62 on Monday, up $15.57. Shares topped $500 in early January and surpassed $550 on July 13. Google's market value is $190.3 billion, making it the 11th-most-valuable company with a primary listing on a U.S. exchange, says Bridge Information.
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