GOOGLE’S STOCK market value topped that of long-time rival Microsoft for the first time yesterday, capping a decade-long struggle for dominance between leaders of the PC and internet eras of computing.
In the first flush of optimism that followed its IPO, investors nearly drove Google’s value beyond that of Microsoft in 2007.
However, the stock retreated as Wall Street worried that the company was pouring money into lossmaking ventures such as the YouTube video site and Android mobile operating system in a vain attempt to head off a slowdown in search advertising growth.
“There’s finally a realisation on the part of investors that this is not a one-trick pony,” said Yousseff Squali, internet analyst at Cantor Fitzgerald.
Instead, Google is set to top Facebook this year to become the biggest online display advertising company, with global revenues likely to hit $6 billion, according to Mark Mahaney, internet analyst at Citigroup. It has also grabbed an early lead in mobile display advertising, and accounts for more than half of that market. The revival of confidence has lifted Google shares by more than 30 per cent in the past three months.
The stock market is uneasy over the release later this year of Microsoft’s Windows 8 operating system, an event chief executive Steve Ballmer has described as a “bet the company” product cycle.
Microsoft is counting on the latest Windows to stimulate a new generation of touchscreen, hybrid devices that will put PCs back on the map. However, most corporate buyers wait a year or more before upgrading, and investors are unsure of Microsoft’s chances of winning back consumers who have turned to Apple devices.
Google’s shares edged up in early trading to value it at $249.2 billion, putting it nearly $1 billion ahead of Microsoft. Among tech concerns, the rise left Google second only to Apple, valued at $628 billion. – (Copyright The Financial Times Limited 2012)
