Private Investor: Never mind what the analysts said: Google's a hit

It's a funny old game, fame. Almost everyone in the land has heard of Abi Titmuss, for example, the ultimate example of someone who is famous just for being famous. But I bet only a fraction of that number know who on earth Sergey Brin and Larry Page are.

It's a funny old game, fame. Almost everyone in the land has heard of Abi Titmuss, for example, the ultimate example of someone who is famous just for being famous. But I bet only a fraction of that number know who on earth Sergey Brin and Larry Page are.

Well, if you don't know - and I didn't before I started looking into it a bit more - Sergey and Larry are the co-founders of Google, which you will also almost certainly have heard of. Interestingly, and just to prove my point, you will find that if you put "Sergey Brin" and "Larry Page" into Google you get 102,000 hits; "Abi Titmuss" gets 131,000. Prophets not even recognised properly by their own search engine, it appears.

Still "Tim Berners-Lee", the inventor of the world wide web, will register 666,000 results: the sort of number that makes the conspiracy theorists excited.

Anyway, Sergey and Larry founded Google less than a decade ago, but it seems so much a part of people's everyday lives that it is difficult to imagine a world where it didn't exist. Actually, I can remember when everyone used Yahoo! and Lycos and AltaVista, and their dominance at that time seemed to be just as much entrenched.

Like Hoover, Google has turned from a trade name into an everyday verb and noun. Unlike Hoover, it is more than a generic name: it represents a monopoly. You might say you were Hoovering the lounge if you were using an Electrolux or a Dyson, but you wouldn't say you'd "Googled" something if you'd put it through Ask Jeeves, say.

For those who thought Google was some sort of flash in the worldwide pan, the results announced by the company last week should be adequate answer.

Google outdid the army of analysts who follow it and predict its financial results. The company was able to announce that first-quarter sales had nearly doubled, and quarterly profits rose six-fold. Revenues in the three months to 31 March rose to $1.26bn (£660m) compared with $652m in the same period last year. Net income increased to $369m from $64m last time. Who said you can't make money out of the internet?

And all the advertising seems to be both effective from the point of view of the companies who place it and unobtrusive to those who use and trust Google as a supplier of data. A remarkable trick to pull off, but it seems the advertisers want more: Google is now proposing to give advertisers more influence in where their ads are shown, how much they pay for them and what they look like. Advertisers will bid to show ads on certain sites, but they will have no veto over what content happens to turn up on a web page when the ad is shown. It's a compromise I hope will satisfy everyone.

For now, though, things are going swimmingly. I bought Google shares earlier this year, and they're already ahead 10 per cent in sterling terms and at an all-time high; $220, against their $45 float last August.

My reasoning is that Google has two good stories attached to it. First, there's the short- to medium-term weakness of the dollar, which means that we on this side of the Atlantic can cash in and buy quality American equities on the cheap. Eventually, when the US economy rights itself and the dollar regains its poise, that will put a useful bit of boost into the returns.

Second, there is that terrific secular growth story. The beauty about a share like Google in an industry such as information technology in this stage of its development is that even the smartest analysts and experts can get things very badly wrong, in a way that they don't even manage to do with more established, slightly easier-to-read sectors such as retail or resources. If you have a hunch that something like Google is going to do even better than the markets reckon, there's as good a chance that you'll be right as they will be. With the help of research using Google, even I managed to prove that.

s.o'grady@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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