Introduced publicly at $80 per share in the summer of 2004, Google Inc., an Web search and advertising provider, is currently dominating its field in the market.
“Google is a great idea and company,” said Damita Davis, a fourth year business student from Landover, Md.
“I love using it, but I will never invest in it.”
Recently, stocks have risen to over $300 per share.
If these numbers continue, Google is well on its way to having another profitable year.
According to Google’s investor Web site, its revenue has been on a steady incline since 2002.
In 2004, the company recorded its best year yet, reporting total earnings of $3.18 billion.
“Speculation is what mainly drove up the demand for the stock,” said Carter Doyle, a professor of economics at FAMU.
Victor I. Oguledo, also a professor of economics at the University, expressed a similar view.
“It’s almost always the expected stream of income that influences the value of a stock,” Oguledo said.
Google’s success is not going unnoticed by others in the market.
An Associated Press article reported that Microsoft is making plans to provide more internet-based services in order to better compete with companies like Google and Yahoo Inc.
Doyle attributes Google’s popularity to the overall quality of the search results produced by its search engine.
He said that although some services like Yahoo do a better job of providing subscription services, Goggle is superior in providing programs that allow users to concentrate their search.
Google attempts to make internet searches easier is by providing a program entitled Google Scholar; this allows a user to search for scholarly literature specifically.
The search engine compiles information from various academic publishers and institutions, ranking them by relevance to the search.
Google’s latest attempt to provide a broader range services for its customers is implementing a book-scanning program, which could potentially cause some legal problems for the company in the near future.
According to an Associated Press article released on Tuesday, Google has been accused of copyright infringement by over 8,000 authors.
The Author’s Guild Inc., a non-profit organization based out of New York, filed the lawsuit in U.S. District Court in Manhattan, noting that the author’s material being held in the public and university libraries was not licensed for commercial use.
Apparently, the lawsuit requests that the court prohibit Google from copying books any longer because the author could suffer; due to not having control over the reproduction of their own material.
“In general, the threat of lawsuits is not good for stocks,” Dr. Doyle said.
However, he did state that this depends on whether the lawsuit brings out something about the company that is a major issue.
Dr. Oguledo also thinks that this is more than likely a non-issue for the company.
He said that a company as large as Google will not be harmed unless there is serious dilemma revealed, as in the case of Napster.
Dr. Oguledo explained that depending on what other investments a person might have in their portfolio, Google could be a sound investment because a major catalyst for globalization is information technology, which Google is the current leader.
Doyle believes that an investor might be taking a chance if he or she buys shares of the stock at this point.
“Right now, the price is kind of high, to me, it’s a little riskier investment at this point,” Doyle said.
Doyle mentioned that there are other factors that could do more damage to the value of Google’s stocks besides the news of the lawsuit; the most influential factor being news of the company’s total earnings.
However, with the direction that Google has been going in the past few years, this should not be a predicament the company will face for an extended period of time.
Contact Ryan Haynes at thefamuanbusiness@yahoo.com