After a bumpy ride toward becoming a publicly traded company, Google finally saw its stock start trading on the NASDAQ exchange at around noon Eastern Daylight Time Thursday and with a strong opening at $100.01, up from its $85 initial offering price. The stock, which trades under the GOOG ticker symbol, closed at $100.34, up 18%.

The strong showing shouldn't be surprising, since Google, founded in 1998, is in solid financial shape and has popular products and services to sell, unlike many of the Internet companies that went public in the dot-com era, an analyst said. "Google has come to the market with a mature product and revenue and profits," said Allen Weiner, a Gartner analyst.

Google, the world's most widely used search engine, filed an IPO registration with the U.S. Securities and Exchange Commission (SEC) in late April, a move that had been rumored for months. Since then, Google's intention to go public attracted intense attention due to its unorthodox Dutch-auction IPO approach, its status as a barometer of investor support for technology companies and, lately, a series of embarrassing snafus that triggered probes from regulatory agencies, leading to speculations that the much-awaited IPO could be derailed.

Lackluster demand for shares during the bidding process led Google to drop its target price for the stock from a high of $135 to $85 and to reduce the number of shares to be sold to around 19.6 million from the originally planned 25.7 million. Thursday's strong opening came as a surprise to market analysts.

The Google IPO comes at a time when the company is engaged in a furious battle with formidable competitors in the search engine market such as Microsoft and Yahoo. The main source of revenue for companies that provide search engine services is online advertising, particularly a specific type called sponsored advertising. These text ads are served along with search results and are supposed to be contextually relevant to the user's query. For example, a seller of women's clothing may pay Google to post its ad when a user enters search keywords such as "skirt" or "blouse."

Advertising tied to keyword searching was the fastest growing and the biggest of all U.S. Internet advertising categories in 2003, according to a report published in April by the Interactive Advertising Bureau and conducted independently by PricewaterhouseCoopers. Keyword search revenue made up 15% of online ad revenue in 2002, and jumped to 35% in 2003. The rest of the 2003 U.S. Internet advertising pie was made up of display advertising (ad banners) with 21% (down from 29% in 2002), classifieds with 17% (up from 15% in 2002) and rich media advertising with 8% (up from 5% in 2002), according to the report. Internet advertising for all of 2003 reached just under $7.3 billion, up nearly 21% from 2002.

Both Yahoo and Microsoft are investing heavily to better compete in this space, and Google needs to stay on its toes in order to fend off these and other competitors, such as Ask Jeeves. How Google invests the money it raises from this IPO is seen as crucial to its ability to compete effectively. "Having the (IPO) money is one thing. It's what they wisely do with it that will be most crucial," Gartner's Weiner said.

The IDG News Service is a Network World affiliate.