Google hits $219bn in success search

Internet firm's market value puts it among America's top five companies - and it plans to get bigger still

Google, the world's most popular internet search engine, has joined the corporate super-league with a market value that ranks among America's top five companies. Ten years after its creation in a Stanford University dormitory, the Silicon Valley firm's capitalisation reached $219bn (£105bn) on Tuesday - overtaking healthcare titan Procter & Gamble to place it in fifth place on the US stockmarket.

Only ExxonMobil, General Electric, Microsoft and the telecoms company AT&T are bigger than Google.

Its shares powered past yet another milestone yesterday as they touched $700 for the first time, less than a month after reaching the $600 mark. By mid-morning in New York, they were up $5.27 to $700.04. Google's growth spurt has been driven by seemingly unstoppable profits: the company's recent third-quarter earnings showed a 46% leap in net income to $1.07bn.

Experts cite its leadership in online maps, videos, news and finance, all of which are thought to offer huge potential for advertising-driven revenue. The company is also going head to head with Microsoft in the software market with its own internet-based word processing and spreadsheet applications which compete with the American software giant's Microsoft Office products.

Google has also become very interested in the potential of mobile phones as devices for accessing the internet and is working on its own mobile phone software and even its own devices. Details of the Gphone - as the project has become known, in imitation of Apple's iPhone - are expected to be released this month .

Google is understood to have talked with a number of Asian mobile phone makers about the possibility of putting its own software on to a new generation of internet-enabled mobile phones. It is also working with a number of companies, including satellite broadcaster BSkyB, about the potential of advertising on mobile phones.

Google is even examining becoming directly involved in the mobile phone industry by buying a mobile phone spectrum in the US and potentially the UK which it could use to run its own mobile services.

Earnings power

Todd Greenwald, an analyst at Nollenberger Capital in San Francisco, said: "Could they be bigger? Certainly. Frankly, the market's only just realising the vast amount of earnings power and is valuing Google appropriately."

The soaring share price means Google's founders - Sergey Brin and Larry Page, both 34 - have paper fortunes of more than $20bn each.

The pair only take salaries of $1 a year but receive more than $1m in annual bonuses. They have shown a taste for jetset living - they have refurbished a former Qantas Airways 180-passenger Boeing 767 as a "party plane" with twin staterooms, a dining room and showers and have won permission to keep it at a usually restricted Nasa base in California.

Google is 10 times as valuable as America's biggest carmaker, General Motors, and is worth 30% more than the world's largest drugs firm, Pfizer. Long established "old economy" brands pale into comparison - Coca-Cola's capitalisation is just $142bn, while McDonald's can only command a value of $70bn.

In the past, the sheer scale of Google has created problems for other internet start-ups in America's technology heartland of Silicon Valley, with the company draining talent from other businesses. The fact that the Mountain View, California-based company allows its engineers to spend some of the company's time on their own pet projects has been very attractive. This practice has spawned products such as Google News. But over the past few months some of the allure of Google has worn off, with several senior Google figures defecting to the social networking site Facebook.

Last week Google lost out to its bitter rival Microsoft in the race to buy a stake in the site and today it is expected to exact its revenge. Google is thought to have teamed up with a host of rival sites, such as LinkedIn and Friendster which between them reach more than 100 million people. Its plan, called OpenSocial, is designed to make it easy for software developers to create applications that work across these networks, making them more attractive for users than Facebook.

Most industry followers believe the only way is up for Google. The information service Bloomberg reported that out of 37 analysts tracking the company, 33 recommend buying the shares and the other four rate the stock as a "hold".

Google accounts for 56% of all searches on the internet according to the online research firm Comscore. In Britain, Google is visited more than any other website with 28.6m unique users in September - reaching 89% of all UK internet users.