Many are undoubtedly looking at Google (NASDAQ:GOOG) almost hitting $600.00 today.  Shares closed barely at a new high closing price $584.39 (old high was $584.35), but intraday today the high GOOG print was $596.81.  We wanted to see how shares have acted at each "$100" interval with so many looking at the $600 mark:

• At $100 in 2004, shares ran to $200 in NOV-04.  Shares faltered around $200 until April 2005.
• At $200+ in April 2005, shares ran to $300 by June 2005. Shares used $300 as a magnet until October 2005.
• At $300+ shares made it to $400 by the end of 2005.
• At $400+ at the end of 2005 it took the stock until November 2006 for shares to hit the $500 mark.
• At $500+ at the end of 2006 shares have traded as low as under $450 in early 2007 and in this last major push shares are just today under that $600 mark.
• This is one of Cramer’s "New Four Horsemen of Tech" and he’s calling for higher.

These "$100" increments, let’s call them century marks, do act asmagnets and then as resistance.  Or at least that has been the caseuntil today.  If you pretend that $600.00 is already here, Google wouldhave a $187.25 Billion market cap and would have forward multiples of:

• Basedon $15.25 EPS and $11.5 Billion revenues for Fiscal 2007 estimates,shares trade at 39.34-times earnings and 16.28-times forward revenues.
• Based on $19.50 EPS and $15.75 Billion revenues for Fiscal 2008estimates, shares trade at 30.76-times forward earnings and 11.88-timesforward revenues.

Based upon the ongoing strength anddemographics holding up for Google, these revenue numbers may beunderestimated if the company can convert more of its free services andrecent acquisitions into direct subscriber or ad-based dollars.  On theearnings front, it seems that the only real issue affecting the companyearnings is whether or not the company hires too many people on itspayrolls or makes too much cap-ex spending on bandwidth and hardware.Advertising on traditional papers and TV may be slowing, but it willtake a significant slowdown for advertisers to slow web advertising(even with less real estate, gambling, and auto ads).  See, Google’s online video dominance and see its Dominance in August.  We started discussing the impacts of a Google Phone back in March, but this has been addressed to death since then.

Earnings are only sixteen days away on October 18, and that in andof itself is going to act as a catalyst for added volatility.  Optionsexpire on October 19, and The $600 CALLS look to have closed out at$10.70.  If the stock whips around more and more until earnings, youcan expect that to perhaps defy and maybe even go against the usualtime value erosion for more normal stocks.

The highest knownanalyst target out there is $700.00 from ThinkEquity and many of theexisting targets out there are right around the $600.00 and higher withtwo other key notes showing UBS $655, Goldman Sachs $625, and Lehman $610.  You could always see the analyst "downgrade on valuations" also come into play, but we won’t go there because analysts could just as easily raise targets at the same time.

Aslong as the market doesn’t give an unexpected October crash or fallapart and as long as the world doesn’t change drastically overnight,Google shares should pass $600.00 on any real market strengthcontinuing.  It isn’t the barrier for the speed of light or anythinglike that.  But after that, history would be on the side of someadditional whipsaws around the $600 handle if this threshold ispierced.

Other recent notes of interest:

• Baidu (BIDU) Market Cap Now One-Third Of Yahoo!’s
• Facebook is the new Skype…..
• Short sellers were very mixed on web stocks most recently.
• Is Yahoo! better off as two companies?
• Can Google Buy-off Europe?

We are getting ready to release a large portion of our "Watch List" small-cap Internet stocks for our "Special Situation Investing Newsletter" readers.

Jon C. Ogg
October 2, 2007 

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

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