After a bumpy ride toward becoming a publicly traded company, Google finally saw its stock start trading on the Nasdaq exchange at around noon Eastern Daylight Time Thursday and with a strong opening at US$100.01, up from its US$85 initial offering price. The stock, which trades under the GOOG ticker symbol, closed at US$100.34, up 18 percent.

The strong showing shouldn't be surprising, since Google, founded in 1998, is in solid financial shape and has popular products and services to sell, unlike many of the Internet companies that went public in the dot-com era, an analyst said. "Google has come to the market with a mature product and revenue and profits," said Allen Weiner, a Gartner Inc. analyst.

Google, the world's most widely used search engine, filed an initial public offering (IPO) registration with the U.S. Securities and Exchange Commission (SEC) in late April, a move that had been rumoured for months. Since then, Google's intention to go public attracted intense attention due to its unorthodox Dutch-auction IPO approach, its status as a barometer of investor support for technology companies and, lately, a series of embarrassing snafus that triggered probes from regulatory agencies, leading to speculations that the much-awaited IPO could be derailed.

Lacklustre demand for shares during the bidding process led Google to drop its target price for the stock from a high of US$135 to US$85 and to reduce the number of shares to be sold to around 19.6 million from the originally planned 25.7 million. Thursday's strong opening came as a surprise to market analysts.

The Google IPO comes at a time when the company is engaged in a furious battle with formidable competitors in the search engine market such as Microsoft and Yahoo. The main source of revenue for companies that provide search engine services is online advertising, particularly a specific type called sponsored advertising. These text ads are served along with search results and are supposed to be contextually relevant to the user's query. For example, a seller of women's clothing may pay Google to post its ad when a user enters search keywords such as "skirt" or "blouse."

Advertising tied to keyword searching was the fastest growing and the biggest of all U.S. Internet advertising categories in 2003, according to a report published in April by the Interactive Advertising Bureau and conducted independently by PricewaterhouseCoopers. Keyword search revenue made up 15 percent of online ad revenue in 2002, and jumped to 35 percent in 2003. The rest of the 2003 U.S. Internet advertising pie was made up of display advertising (ad banners) with 21 percent (down from 29 percent in 2002), classifieds with 17 percent (up from 15 percent in 2002) and rich media advertising with 8 percent (up from 5 percent in 2002), according to the report. Internet advertising for all of 2003 reached just under US$7.3 billion, up nearly 21 percent from 2002.

Both Yahoo and Microsoft are investing heavily to better compete in this space, and Google needs to stay on its toes in order to fend off these and other competitors, such as Ask Jeeves Inc. How Google invests the money it raises from this IPO is seen as crucial to its ability to compete effectively. "Having the (IPO) money is one thing. It's what they wisely do with it that will be most crucial," Gartner's Weiner said.

Several investment areas are key for Google, Weiner said. First, it must beef up its branding. "The day a company goes from private to public it has far more responsibility in guarding its brand. Its brand is crucial. Part of the money needs to go in creating a stronger marketing presence, better media relationships, a more focused brand resonance. That's not cheap."

Second, Google must articulate its business strategy. "I don't believe search is a business. It's a technology, a platform. It's the applications of that search technology that are a business," Weiner said. Consequently, Google must continue enhancing its search technology, while simultaneously cultivating applications for it in the content/media space, he said. "The deeper and richer experience the consumer can have through additional layers of content, the more powerful Google becomes."

Along these lines, Google, whose engineering ranks are very strong, needs to boost its media/content capabilities, and it needs to start by finding a high-ranking executive to lead that effort, a role that has been played very well at Yahoo by its Chairman and Chief Executive Officer Terry Semel, Weiner said.

An area the company should definitely invest in is in furthering its international expansion, said John Tinker, managing director and media analyst at investment bank Think Equity Partners, which initiated coverage of Google Thursday with a "buy" rating. "There's a huge opportunity internationally for Google," Tinker said.

Even with all pistons firing, Google faces an intense fight with Yahoo and Microsoft, Gartner's Weiner said. Yahoo has built a strong brand as a stellar provider of Internet content and services for its users and of an attractive platform for advertisers, while Microsoft can complement its search offerings with a wide suite of other Internet services and PC software products, Weiner said. "It's a tight 3-horse race. There's no question," he said.

In the meantime, both the U.S. Securities and Exchange Commission (SEC) and California authorities are probing Google's possibly illegal way of granting shares to employees and consultants over the past several years. Also controversial is the concern that Google's founders may have violated U.S. securities laws by giving an interview to Playboy that ran in the magazine's September issue, which hit newsstands this month, because company executives are barred from discussing their company's prospects prior to an IPO.

On a positive note, Google is in healthy financial shape, having reported recently revenue of US$700 million for the three months ended June 30, 2004, more than double the US$311.2 million for the same quarter a year earlier. Net profit also more than doubled over the same period, to US$79.1 million from US$32.2 million, according to the company.