SAN FRANCISCO — While Wall Street obsesses over Apple Inc.'s free fall and Facebook Inc.'s face plant, a global Internet giant is quietly growing ever more valuable.
Google Inc.'s stock topped $800 for the first time Tuesday.
The all-time high for Google is largely symbolic — and analysts say the stock could retreat in future trading sessions. But it underscored the dramatic resurgence of the undisputed king of online advertising.
It's also vindication for the search giant that some had predicted would quickly be overshadowed by Facebook's meteoric rise and the spectacular growth of Apple's iPhone and iPad.
"Bottom line: It seems like Google is doing a lot of things right," S&P Capital IQ analyst Scott Kessler said.
That wasn't always the case, especially during the recession. Google's stock plunged to as low as $247.30 at the end of 2008. Even as the economy shook off its doldrums, Google was still hobbled by concerns that it was a slow-moving technology giant that had lost its competitive edge and drive.
But Google has recently emerged as the company to beat. Analysts say it's gaining a big head of steam as it expands into Apple's consumer electronics territory and aims to invent a whole new category of wearable computers with Google glasses, its Internet-connected eyewear.
In sharp contrast, Apple shares have plummeted 35% from their record high of $705.05 in September as investors have grown increasingly worried that the company is losing its edge with consumers and has yet to come up with its next breakthrough product. And since its disastrous initial public stock offering, Facebook has struggled to convince investors it can successfully make the leap to a company that caters to users on mobile devices instead of personal computers.
Wall Street is crediting Google Chief Executive Larry Page's ambitious vision for the rise in the stock and the company's fortunes.
The Google co-founder took back the helm nearly two years ago. Under his leadership, Google is seeing payoffs from its investment in two key areas that are generating even more opportunities to sell ads: the world's most popular video site, YouTube, and the ubiquitous Android mobile software that powers more than 600 million smartphones and tablet computers. And it's testing new technology such as driverless cars.
"It marked a transition point in the way that Google positioned itself and executed," Kessler said.
Page took swift action to streamline decision-making and refocus the company by closing dozens of services. He engineered the $12.5-billion acquisition of Motorola Mobility and pushed for Google to enter social networking with the rollout of Google+.
Now Google is reportedly considering opening up its own retail stores as it makes even more of its own hardware such as smartphones and tablets. The company has already experimented with pop-up stores in airports and mini-stores inside Best Buy stores, taking a page from Apple's playbook.
One of its biggest achievements takes aim at Apple. Google gives away Android, its popular mobile software, to Samsung Electronics Co., HTC Corp. and other mobile device makers that compete with Apple's iPhone and iPad.
Also renewing investors' confidence: Google addressed many of the challenges that had weighed on the stock, such as the specter of a federal government antitrust lawsuit and the effect of the Motorola Mobility acquisition, BGC Partners analyst Colin Gillis said.
Now investors are asking a question that once would have been unthinkable: Is Google the next Apple?
Analysts say it's too soon to tell. Google hit a 12-month low of $559.05 in June. It closed up $13.96, or 1.8%, at $806.85 on Tuesday. Based on historical trading patterns, it could easily dip again.
"Google is certainly positioning itself for new growth streams," Gillis said. "That doesn't mean there are not negatives. And that doesn't mean the stock is not going to fall below $800 again."
The U.S. ended its antitrust investigation into Google's search business in January, saying there was no evidence that its business practices harmed consumers. But Google is still trying to settle a European Union probe. Google also continues to face privacy scrutiny in Europe, where it's under fire for the privacy policy it rolled out a year ago that combines user data from all of its services, including Gmail and YouTube.
Google is on the hook if digital video recording company TiVo Inc. wins a patent infringement lawsuit against Motorola Home, which makes TV set-top boxes. As part of its agreement to sell Motorola Home to Arris Group Inc. in December for nearly $2.4 billion, Google agreed to indemnify Arris in the case.
And Google still plays second fiddle to Apple, which is the most valuable U.S. company with a market value of $432 billion. Google is No. 3 with a market value of $266 billion, behind Exxon Mobil Corp.
But analysts say far and away the biggest challenge for Google is the slowdown in its core business of selling ads on personal computers as people's attention shifts to mobile devices, on which ads command lower prices.
Google makes a fraction of the money from mobile ads that it does from online ads. Google is attempting to boost those prices by pushing advertisers to buy mobile ads when they are creating campaigns for personal computers.
"It remains to be seen how advertisers will react to higher prices," Sterne Agee analyst Shaw Wu said.
Wu initiated coverage of Google with a "neutral" rating this month because of concerns about "mobile monetization."
"With Android, the company is clearly building a very large base of mobile users but like many of its technology peers, the big question is whether it can monetize in a big way, which only Apple and Samsung so far have been able to do," Wu wrote in a research report. "Our key concern is that this mobile transition may be tougher and take longer than consensus thinking."
Page told analysts last month that Google this year will generate more than $8 billion in revenue from mobile ads, apps and video content, compared with about $2.5 billion from mobile ads last year.
"I am not worried about this in terms of our business at all," Page said, referring to the challenge of making money from mobile ads.
jessica.guynn@latimes.com
Google hits a milestone as it quietly grows its market value
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Google hits a milestone as it quietly grows its market value
