Google jumped to a market capitalization of $131.9-billion (U.S.) when its shares rose 3.7 per cent to $446.21 with the news, topping IBM's market cap of $131-billion. Google shares later closed down 1.3 per cent. At day's end, IBM was worth $130.7-billion and Google had fallen to $125.5-billion.

Google's shares have doubled since Jan. 1 on analysts' predictions that profit will rise fourfold to $1.62-billion this year. IBM shares have declined 15 per cent on estimates of 11-per-cent profit growth and a 4-per-cent sales drop. A stake in AOL, part of Time Warner Inc., would allow Google, the world's most-used search engine; to fend off the competition from Microsoft Corp.'s MSN search.

"There are some big shifts going on and Google is in the sweet spot," explained Michael Halloran. Halloran is an analyst with Allegiant Asset Management Co. in Pittsburgh, which owns Google shares among $12-billion under management. "Since their IPO, they've done nothing but surprise on the upside. If you look at Google, it has totally different growth characteristics than IBM.”

IBM was founded in 1911, with roots dating to 1880 according to its website, is also the world's second-biggest software company, only topped by Microsoft. It was the largest computer maker until it sold its PC division to Lenovo Group Ltd. in May. It is the world's largest computer services company and has 329,000 employees.

Google's market cap earlier this year surpassed Cisco Systems Inc., the largest maker of equipment for directing Internet traffic.

Google is attracting advertisers who are spending more to reach its 400 million monthly users. A deal with AOL is still expected this week.

By Patricia Fuller
Jump2Top.Com
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