NET STOCKS: Best And Worst Of The Net In 2005

[Allan]

SAN FRANCISCO (Dow Jones)--As far as Internet stocks are concerned, 2005 was the year of Google Inc. (GOOG), but, unfortunately, the search darling's rising tide didn't quite lift all boats.

Google's soaring shares now account for more than 10% of the Dow Jones Internet Composite Index, an equity benchmark index of companies that generate the majority of their revenue from the Internet. But while the index clawed its way back to early 2001 levels, up around 9% versus the Nasdaq Composite Index's 2.4%, it still is at one-fifth of the value reached in March 2000.

The Web's "Big Four" - Google, Amazon.com Inc. (AMZN), eBay Inc. (EBAY) and Yahoo Inc. (YHOO), which make up almost 40% of the index - each picked up considerable steam heading into the new year and delivered new gravitas to Internet large-capitalization stocks.

Still, while Google shares skyrocketed more than 110% as of the last trading session, a number of notable names in the index - including Audible Inc. (ADBL), InfoSpace Inc. (INSP) and Overstock.com Inc. (OSTK) - saw their gains from last year quickly vanish, enough to recall the stomach-turning declines witnessed in 2000.

- Google (up 111%): Google's soaring market capitalization left eBay and Yahoo in the dust in early 2005. But soon enough, the search engine was the most valued media property, topping the market caps of Time Warner Inc. (TWX) and Walt Disney Co. (DIS).

As an innovative technology company, Google is worth more than previous growth-stock darlings, such as hardware giant Cisco Systems Inc. (CSCO). Google's popular brand name has also made it more valuable than one of the most longstanding consumer brands, beverage giant Coca Cola Co. (KO).

Now, bullish analysts have slapped a $575 price target on Google, suggesting its market cap could balloon to around $170 billion, up more than 25% from its roughly $415 stock price, or $120-plus billion market cap. At that valuation, however, Google will still be worth less than Microsoft Corp. (MSFT), which currently has a market capitalization of around $280 billion.

Highlight in the last year: Google shares took a breather in the $300 range before blowout third-quarter earnings launched them skyward by more than $100 a share.

While there were many skeptics one year ago when Google stood at $200, Dow Jones columnist Bambi Francisco noted that Google's run was hardly over as large institutional investors would continue snapping up shares.

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