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Analysts eager to grill Google
Experts want to uncover what makes Google tick and if it'll be disciplined in hyper-growth climate?
February 9, 2005: 11:50 AM EST
By Aaron Smith, CNN/Money staff writer

NEW YORK (CNN/Money) - When Google meets with Wall Street analysts Wednesday, executives will be facing a stiff series of questions.

Among them: Can the red-hot search engine keep up its phenomenal growth, and what about all those stock options that could cause a wave of stock selling next week.

On Feb. 14, 176 million shares of Google stock, which have been locked up under the company's complex stock-release program, are scheduled to hit the market.

Mark Mahaney at American Technology Research, for example, wants to know Google's (Research) plans for Asia, where it's not the leading search engine, as it is in the Europe and the United States. And how can it maintain product quality and stay organized while growing so rapidly, he wrote in a note to clients Tuesday.

Mahaney has a buy rating on Google and a price target of $275.

"The last time the Google management team got together with 200 plus of its closest institutional investor friends, GOOG's valuation took a big hit," Mahaney wrote. "Will it happen again this week? We don't think so."

Nonetheless, Google executives should be ready for some difficult questions. Despite his high price target, Mahaney is concerned about Google's ability to keep up with its growth.

"I'm worried about how well they can handle hyper-growth," said Mahaney, in an interview. "It's very hard to maintain discipline when you're growing that fast."

According to David Garrity, chief financial officer for Caris & Company, investors are nervous about possible volatility on Feb. 14, the expiration date for the company's IPO lock-up.

Garrity, who also rates Google a "buy," the company plans to distinguish itself from competitors through expanding its language translation technology, since 64 percent of the world's Internet users do not speak English.

Google is holding the meeting just days after trounced bullish Wall Street projections in announcing strong fourth-quarter increases in sales and earnings.

In its Feb. 2 report, its second since going public, the company announced net income of $204 million, or 71 cents a share, a 650 percent increase from the same period last year.

Excluding stock compensation expense, Google earned 92 cents a share, well above analyst projections of 77 cents. Excluding traffic acquisition costs, Google reported sales of $654 million, ahead of the Wall Street consensus of $592 million.  Top of page

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