Fee fi fo fum: Google smells the blood of Microsoft

ByABC News
October 31, 2007, 2:21 PM

— -- The online search giant Tuesday soared $15.54 to $694.77, briefly coming within 9 cents of $700, on excitement over reports about its plan to jump into mobile phones.

The milestone underscores Google's transition from an ambitious fledging trying to take on established tech companies to becoming the establishment. "I'm not sure how many people appreciate the size of this company," says Scott Kessler, stock analyst at Standard & Poor's, which added Google to the widely followed S&P 500 index in March. Although Google could easily drop out of the top five, the fact that it got there so fast shows it is:

Ryan Jacob, portfolio manager at Jacob Asset Management, is betting on Google and owns Google stock. "Google is the Microsoft of a new generation," he says.

Not so fast, says Kessler. As Google becomes the company others fear, competition from rivals and resistance from partners will intensify, says Kessler, one of only two analysts who rate Google anything less than a moderate buy. "Microsoft may be a company that has more to offer than people thought," he says.