* Signs Google is back on track
* Multiple brokerages raise targets
* Shares rise as much as 13.5 pct
(Adds analyst comment, adds LOS ANGELES to dateline, updates
By Supantha Mukherjee and Edwin Chan
BANGALORE/LOS ANGELES, July 15 Shares of Google
Inc (GOOG.O) surged as much as 13.5 percent on Friday, a day
after blockbuster results and signs of success in mobile and
social networking revived hopes the Internet titan was getting
back on a growth track.
Its shares shot up to $600.25, climbing back to pre-2011
levels on the Nasdaq. If the gain stands by the end of Friday,
it would mark the biggest single-day gain for Google shares
since October 2008.
Chief Executive Larry Page, who provoked grumbles by saying
only a few words on the last quarterly earnings call, ticked
off a string of fresh statistics on Thursday that underscored
progress on several fronts, including 10 million-plus members
for the two-week-old Google+ social network.
Reuters Insider show on link.reuters.com/guq62s
Breaking Views: Google shrugs off economy and sets bar for
More than 135 million Android smartphones or tablets --
made by the likes of Motorola (MMI.N) and Samsung (005930.KS)
-- have been activated. And its Chrome browser is now employed
by more than 160 million users. [ID:nN1E76D1RO]
Analysts said that perked up sentiment in a long-pressured
stock, but investors should wait and see if it can carry the
"At the end of the last quarter, there was what we deemed
to be a significant overreaction to perceived overspending,"
said Morningstar analyst Rick Summer.
Now "we're seeing early signs that new investments should
continue to extend the runway out," he added. "There's a little
more optimism around these longer-term initiatives."
Google is investing heavily to arm itself in a brewing
battle on several fronts: with Apple Inc (AAPL.O) and Microsoft
Corp (MSFT.O) on mobile and content, and with Facebook and
Twitter on the Internet, to protect its lucrative search
business at a time when mobile gadgets and social media are
redefining the way consumers use the Web.
But the share jump suggested Wall Street was now more
willing to give Page the benefit of the doubt than just a
quarter ago, when he stunned investors by cutting short an
appearance on an earnings conference call.
Page appeared to have won over some investors on Thursday.
The co-founder said he was committed to crafting "services that
people across the world use twice a day -- just like a
"He understood the need to balance the near-term with the
long term and would be cognizant of the fact that it is
shareholder money that is being invested into various products.
This should assuage concerns about unfettered spending," said
B. Riley analyst Sameet Sinha.
The results were strong despite a seasonally slow quarter,
macroeconomic softness and substantially higher costs -- which
are expected to continue to weigh on margins in 2011. Investors
had feared Google's ever-increasing spending would eat into
margins. Operating expenses leapt 49 percent to $2.97 billion
in the second quarter, to about a third of revenue.
"Investors will welcome his reassuring comments about
fiscal discipline and product focus," said Wells Fargo analyst
Google shares were up 12.8 percent at $596.57 on Friday
afternoon, off the earlier high at $600.25.
Google+, the new social networking service still in testing
phase, also garnered attention from Wall Street. Maynard called
Google+ a huge swing factor but said early signs of 10 million
users and 1 billion items shared were encouraging.
The better-than-expected results and successful Google+
launch should stem some of the short-term stock angst about
their investment and development strategy, Maynard said.
Evercore analyst Ken Sena raised his price target on the
stock to $735 from $670, while Collins Stewart analyst Mayuresh
Masurekar raised his price target to $725 from $680.
Jefferies raised its target on the stock to $830 from $800,
while Barclays Capital lifted its target to $730 and $675.
All five brokerages kept their top ratings on the stock,
which was trading at $595.80 in late morning trade.
Google shares, publicly traded since 2004, hit their
all-time high of $741.79 in November 2007.
"We are witnessing signs of increased competitive advantage
for Google, particularly in Display and Local, with Search
showing no signs of slowing," Sena said.
(Reporting by Supantha Mukherjee and Edwin Chan, editing by
Gopakumar Warrier, Roshni Menon and Matthew Lewis)