Wall Street found Google's ( GOOG) investor-day menu more to its liking on the third try. Last year, analysts derided the company for subjecting them to a presentation by its chef. Earlier this week, finance chief George Reyes triggered the gag reflex with his slow-growth talk. But if lunch Thursday at Google's sprawling Mountain View, Calif., compound wasn't exactly spicy, at least the fare was reasonably tasty. CEO Eric Schmidt made some oracular comment prominently featuring the number $100 billion. Reyes mentioned that the company was driven by metrics such as clickthrough rates before adding, "If we shared these metrics with you, we would be sharing them with our competitors." Nonetheless, the notoriously close-mouthed company was praised for providing more information than before. The shares rose. On Friday they traded at $383.48, up $7.03. "The improved disclosure helped us as investors walking away feel more comfortable about the company's longer-term competitive position," wrote Bear Stearns analyst Robert Peck, who rates the shares outperform, in a note to clients Friday. "For the first time, management stated that their long-term operational goals for the company will result in increasing shareholder value." Bear Stearns makes a market in the company's shares. Google also tried to quell some of the many rumors about the company, including that it plans to compete with eBay's ( EBAY) PayPal through a payment system that it's developing. eBay also happens to be a major purchaser of keyword advertising. Improving search quality, traffic and the quality of its advertisements, building new products and services for publishers and increasing the number of partnerships are among Google's strategic goals. Schmidt stressed that the company is interested in taking a bigger share of the worldwide advertising market.
Google repeated its previous comments that click fraud isn't material to the company's earnings, and stressed that it sees growth opportunities in areas such as local search and mobile devices. CFO Reyes also stressed that the company was ramping up spending to cover technology costs and new hires in a disciplined manner. "We believe Google's analyst day succeeded in addressing investor issues and alleviating concerns regarding strategy, capex spending, and product monetization," writes WR Hambrecht analyst Denise Garcia, who rates the shares buy, in a note to clients. "Overall, Google presented a clearly defined strategy for increasing revenue and maintaining high growth rates throughout 2006." WR Hambrecht makes a market in Google shares. Merrill Lynch analyst Lauren Rich Fine, who is more skeptical than most analysts about Google, argued in her note that the company's strategy may not be realistic. Rich Fine rates Google shares as neutral. Merrill Lynch also makes a market in the stock and expects to provide investment banking services within the next three months. In addition, she wondered about Schmidt's pledge to build the infrastructure this year to support a $100 billion company, be it measured in revenue or market cap. It was that comment that garnered most of the attention in press reports about the meeting. She titled her report "Megalomania Can Be Good and Bad." "If for optimism's sake we assumed that the $100 billion is a revenue number, is it realistic to think that Google can capture one-sixth of the global ad market, which is estimated to be $600 billion," Rich Fine writes. "We find this to be a lofty goal to achieve."