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Google shares reach pre-IPO goal price

By Alan Mirabella and Adam Steinhauer
Bloomberg News

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Shares of Google, the most-used Internet search engine, topped the high end of the price range that it suggested investors bid for its initial public offering, reflecting optimism about advertising sales on its Web site.

Google shares touched $135.02 in trading yesterday, the highest since the Aug. 18 IPO. The company last month sought to sell its shares for between $108 and $135 each before cutting the price to $85. The suggested range was reduced after Google's sales growth slowed in the second quarter and the company came under scrutiny from securities regulators.

Five securities firms that helped sell the IPO recommended the shares for the first time yesterday, saying Google is poised to boost ad sales and expand outside the U.S. The reports are spurring retail investors to buy the stock at a time when it's overvalued, Soleil Securities analyst Laura Martin said.

"At current valuation levels, Google would have to achieve long-term growth rates higher than any advertising-driven media has ever experienced," said Martin, who put a "sell" rating on Google shares when they traded at $102. "No other company has ever achieved what Google must to justify the share price."

Morgan Stanley analyst Mary Meeker said Mountain View, Calif.-based Google may increase sales 93 percent next year.

Google may sell more ads as the Internet advertising market grows by 19.8 percent a year to $17.9 billion in 2008, Credit Suisse First Boston analyst Heath Terry wrote.

Following those reports and analyst research from JPMorgan Chase, Thomas Weisel Partners and WR Hambrecht, Google's shares Tuesday rose 7.2 percent to close at $126.86.

The company's stock yesterday rose $4.22, or 3.3 percent, to $131.08, its highest level since trading began Aug. 18.

The Securities and Exchange Commission and regulators from states including California are investigating past sales of stock to employees and others that may not have been registered properly by Google, the company has said in regulatory filings.

Google has said it also could be vulnerable to legal claims that it broke securities laws when founders Sergey Brin and Larry Page granted an interview to Playboy magazine that was published before the IPO. The company said it doesn't believe it broke the law.

Copyright © 2004 The Seattle Times Company

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