Google stock price hits a record high

SAN FRANCISCO - Google Inc.'s stock reached a new high yesterday, reflecting Wall Street's renewed faith in the Internet search leader as it introduces new ways for advertisers to reach its steadily expanding online audience.

The shares peaked at $560.70 before falling back to finish at $560.10, up $7.27, or 1.3 percent. The rally eclipsed Google's previous record high of $558.58 attained in mid-July, just days before the Mountain View-based company disillusioned investors with a second-quarter profit below analyst estimates.

Google, founded just nine years ago, now has a market value of almost $175 billion, more than long-established technology bellwethers such as Hewlett-Packard Co. and IBM Corp. The stock has increased more than six-fold from its initial public offering price of $85 in August 2004.

The latest run-up in Google's stock represents a turnaround from about a month ago, when shares briefly dipped below $500 amid the stock-market turmoil triggered by a home-mortgage meltdown that raised fears of a recession.

Those worries have lessened because of the Federal Reserve Bank's decision to lower short-term interest rates by 0.5 percentage point in a move expected to free more money for consumers and businesses to spend.

Google stands to benefit because it runs the largest advertising network on the world's hottest marketing medium, the Internet.

Despite aggressive challenges by rivals such as Yahoo Inc. and Microsoft Corp., Google has widened its lead in searches, the activity that triggers the text-based ad links that have become a huge moneymaker.

In August, Google handled 54 percent of all U.S. search requests, up from 50 percent a year earlier, according to the research firm Nielsen/NetRatings Inc. Yahoo lagged well behind at 20 percent followed by Microsoft at 13 percent.

The formidable lead enabled Google to earn $1.9 billion on $7.5 billion in revenue during the first half of the year. The company usually makes even more in the second half because of the advertising blitz that accompanies the holiday shopping season.