Wall Street Beat: Apple, Google make history

Tech-company investors this week faced a mixed bag of news, including some historic events, as Apple Computer Inc. and Intel Corp. joined forces, Texas Instruments Inc. (TI) issued an upbeat earnings forecast and Google Inc. shares headed skyward in a moment reminiscent of the dot-com boom.

Ten months after its initial public offering, Google shares ascended to the point where the company became the most highly valued media company in the world, beating Time Warner Inc. This is a case of really new media beating out semi-new media: The current incarnation of Time Warner was born five years ago when America Online Inc. (AOL) purchased Time Warner for approximately US$110 billion. That combination, pitched as a synergistic merging of old and new media, turned sour as ultimately aspects of AOL's business ended up dragging down Time Warner profitability.

Google's moment came Tuesday, when the company's share price (ticker symbol: GOOG) jumped $2.18 to close at $293.12, and during the day came within a dollar of $300. That made Google's Tuesday market capitalization (share price times number of outstanding shares) about $80 billion, against Time Warner's $78.1 billion. That's an echo of the dot-com boom when "positioning" and "potential" in the Internet market counted for more than old-fashioned sales: Google 2004 sales were $3.2 billion against Time Warner's $42 billion.

Google faces tough competition from rivals including Microsoft Corp. and a variety of online search and information companies. However, only one out of 29 analysts surveyed by Thomson Financial is recommending a sell of Google stock, while 24 are recommending either a buy or a "strong buy."

The week started out with another historic moment: Apple's Steve Jobs taking the Macworld stage in San Francisco to confirm rumors: The company will be using Intel chips in the future, moving away from PowerPC processors made by IBM Corp. and Freescale Semiconductor Inc. Theoretically, that means Macs will be able to run native Windows.

There are good technical reasons for the switch, according to analysts. Intel chips over the next few years could give Apple a better performance-for-power-consumption ratio than PowerPC chips, and supplies of PowerPC over the past year were a bit low for comfort. However, even though some Mac software developers at Macworld said they were unfazed by the switch, the move is still a risk for Apple. If developers don't port their applications to Intel architecture in a timely manner, it could have a negative impact on Apple sales.

Sign up for ITworld's Daily newsletter
Follow ITworld on Twitter @IT_world

• Email
• Print
• Share
  • Slashdot
  • Digg
  • Stumble
  • Reddit
  • Newsvine