• Financial Times, Wednesday, November 22, 2006 11 AM

Google shares exceeded $500 for the first time yesterday, and instead of worrying about excessive valuations, analysts and critics are looking ahead to another burst of growth. Google's shares finished the day at $509.65 yesterday, bringing the company's market cap to $153 billion, more than half of Microsoft and four times greater than Yahoo. It's stock has now surged 37% from its low this year.

Part of the reason Google's stock slid in the first place was due to the comment made by CFO George Reyes that investors should expect advertising growth to slow. Shares have now grown more than five-fold since Google's initial public offering in August 2004.

Is Google still a good value? Youssef Squali of Jeffries & Co. now values the company at around 21 times its expected 2007 cash flow, which is roughly in line with what the company offered shares for when it went public. However, if you include employee stock option expenses, Standard & Poors would tell that the stock is trading at 57 times its expected net income for this year. As ever, inconsistency and mystery surrounds Google on Wall Street, a company that, frustratingly for analysts, doesn't give an indication of its next-quarter performance.

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