Google to sell $4 billion in stock

There's a common trait among users of Google Inc.'s search engine and the company's investors: They've come to always expect good results. But some investors are starting to wonder how sustainable Google's meteoric growth is.

Google's announcement yesterday that the company will sell up to $4.2-billion (U.S.) in stock is likely to address those concerns, as the media giant raises cash for more takeovers, analysts say.

The driving force behind Google's profitability so far has been Internet advertising, which is still expected to grow. U.S. spending on paid search ads will grow to $7.5-billion in 2010, from $3.1-billion last year, according to JupiterResearch, a business and technology market research group. The vast majority of Google's revenue comes from such ads, informs The Globe.

According to Business Week, Wall Street analysts filled the void with speculation.

"They have massive infrastructure plans, so I'd say (it may buy) a couple hundred thousand more servers, a bunch of dark fiber, maybe a few data centers," said Mark Stahlman, an analyst at Caris & Co. "Quite possibly wire up half the United States with Wi-Fi or something."

In a research report, Merrill Lynch analyst Lauren Rich Fine noted there was speculation Google might have been interested in buying China's before its public offering earlier this month.

"We have no insight into this, but note that it, in our view, is a good public fit," Fine said, adding that other possible acquisition targets include TiVo and Infospace, another search company.

It's also possible that Google just sees an opportunity to raise some money to bolster its current balance of about $3 billion. Its stock price has more than tripled since the August 2004 IPO that was priced at $85 - well below its original target range of between $108 to $135 a share.

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