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The Company With the Midas Touch
IN GREEK MYTHOLOGY, KING MIDAS is popularly remembered for his ability to turn everything he touched into gold: the "Midas Touch". One company that has this uncommon power is Google Inc.

Let's take a look why. Google shares have increased more than sevenfold from their initial public offering price of $85, leaving the nine-year-old company with a market value of $193.31 billion---worth more than bigger, more mature businesses like Wal-Mart Stores Inc., Coca-Cola Co., Hewlett-Packard Co. and IBM Corp.

Google Inc. stock price sailed past $600 for the first time Monday, extending a rally that has elevated the Internet search leader's market value by about $25 billion in the past month. Wall Street investors are confident that the Web search leader's advertising technology will capitalize on new areas of the media industry. Google stands to benefit because it runs the largest advertising network on the world's hottest marketing medium, the Internet.

From its place as the leading site for conducting Internet searches, Google has branched into Web video with its purchase of YouTube, stepped on Microsoft's territory with e-mail and other Web-based applications, and taken aim at Yahoo's stronghold in graphical display advertising.

"Google continues to gain market share in search queries while continuing to face a bevy of competitors," Bear Stearns analyst Robert Peck wrote in a note to its customers.

"Further, Google's efforts in online video, radio, and print, have added a layer of value that is absent from its competitors' portfolio of offerings and which has the potential to yield significant financial rewards," Peck said.

Yesterday Google's shares briefly hit $600 for the first time early in its trading session on the Nasdaq, marking a key threshold for the company which priced its shares at $85 a piece at its initial public offering in 2004. At this very moment, 11:08 AM ET, Tuesday, October 9, 2007, Google's stock price is quoted at $618.67 equivalent to a market capitalization of $193.31 billion. Some analysts see Google reaching $700 a share in the next year as it competes more fiercely with Yahoo and gains a foothold in new forms of Web marketing, including video.

In August, Google handled 54 percent of all U.S. search requests, up 50 percent at the same time last year, according to the research firm Nielsen/NetRatings Inc. Yahoo lagged well behind at 20 percent followed by Microsoft at 13 percent. The formidable lead enabled Google to earn $1.9 billion on $7.5 billion in revenue during the first half of the year. The company usually makes even more money during the second half because of the advertising blitz that accompanies the holiday shopping season.

Google already is trying to boost its profits by rolling out other marketing options besides staid advertising links. Last month, Google began showing video ads on its subsidiary, YouTube, the Web's most popular video channel. Earlier this week, Google dramatically increased the number of ads distributed to mobile phones and unveiled a system for displaying ads on "widgets"—mini-applications that are embedded on Web pages.

Who's behind this golden company? Let's take a brief look at these guys with the "Midas Touch":

1. Dr. Eric E. Schmidt Ph.D., 52
   Chairman, Chief Executive Officer, Chairman of Executive Committee, Chairman of Acquisition Committee and Chairman of Real Estate Committee
2. Dr. Larry Page , 34
   Co-Founder, President of Products, Director, Member of Executive Committee, Member of Acquisition Committee and Member of Real Estate Committee
3. Dr. Sergey Brin , 33
   Co-Founder, Director, Member of Executive Committee, Member of Acquisition Committee and Member of Real Estate Committee
4. Mr. George Reyes , 52
   Chief Financial Officer and Sr. VP
5. Dr. Shona Brown , 41
   Sr. VP of Business. Operations

These are the guys who pull the strings at the Google Complex. Notice how young they are. I remember when I was that age, I still believed in Santa Claus. (Grin)

How does Google's shares compare with it's main competitors? These are the prices quoted at the close of Nasdaq yesterday:

• Google - $604.49
• Apple - $168.63
• Amazon - $95.34
• Microsoft - $29.73
• Yahoo - $27.96

Google is a company that you either love or hate, just like Microsoft was when it was the king of the heap, before it lost some of its luster. But there is one thing you can't hide. As of today, Google has the rare ability to turn things into gold. Tomorrow.......who knows?

Markets change. Companies that change with them survive. Those that anticipate change do better still. Those that resist change or change too slowly go the way of the dinosaur. Charles Darwin was eloquent in his theory of the survival of the fittest.

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