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Google Near $1,000 a Share as Earnings Loom

Douglas A. McIntyre

For investors who believed that Google Inc.'s (GOOG) shares would be held down because it has only one source of revenue, it is time to adjust expectations. The search company does rely almost entirely on advertising sales. However, that is enough for now, as Google's shares get ready to go over $1,000, not just for the first time, but for a long time.

Google's earnings are expected to be $10.79 a share on revenue of $14.42 billion. It will only take a few cents better or a hundred million dollars higher than that for the shares to ride rapidly above their current $920. After all, Yahoo! Inc.'s (YHOO) stock rose 10% on earnings and a forecast that worried some investors.

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Almost forgotten by investors right now are Google's failures in the hardware business, particularly its buyout of Motorola, and the lack of revenue from large initiatives -- especially Android. Part of the market's enthusiasm for Google may be that, if only one of these bears fruit and Google moves beyond advertising, it finally will have picked the lock to being a more than what it has been, at least financially, for more than a decade.

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Google really has very few of the triggers that have moved tech stocks higher recently. It does not have new management. No raider has threatened to take a stake and lobby for better shareholder returns, and it has not announced a fat dividend like Apple Inc. (AAPL) did. Actually, it could be argued that Google faces among the greatest barriers of its history, as the European Union presses an antitrust case that could cost it market share in Europe and massive fines.

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There was a time when Microsoft Corp. (MSFT) had only one important line of business. The same can be said of Apple and Cisco Systems Inc. (CSCO). Each found some footing outside those businesses. For a time, the expansion helped each one. Based on their recent histories, those expansions may have been ill-advised. Google does not have that sort of problem -- yet.

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In the meantime, the search business is enough. And why not? It results are still extraordinary.

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