July 26 (Bloomberg) -- Google Inc. stock has rapidly become one of the highest-priced names on the U.S. market. Shares of the popular Internet search engine closed yesterday at $295.85, up 248 percent from $85 at the 2004 initial public offering.

Any hot Internet company of the past would already have split its stock, betting that a lower share price would keep the speculation going.

Google's young co-founders, however, resist a split because of their desire to bend it like Buffett.

Sergey Brin, 31, and Larry Page, 32, are unabashed admirers of Warren Buffett, 74, who runs investment company Berkshire Hathaway Inc. Buffett decries stock splits, saying they produce volatility. Berkshire Hathaway A shares closed at $84,000 yesterday.

At Google's first shareholders meeting, in May, Brin and Chief Executive Eric Schmidt said there were no plans to split their company's stock. That was smart. Google shares were frothy enough, trading at more than 100 times trailing 12-month earnings.

A high price should help keep speculators in line. Taking a flier on 100 shares of Google at $29,585 is far different from gambling $8,500 for 100 shares at the IPO.

Over and Over

In the late 1990s, many companies set themselves up for the stock market plunge that was to come by splitting their shares. Internet retailer Amazon.com Inc. split a total of three times in 1998 and 1999. In late 1999, the stock sold for $113, adjusted for the splits. By yesterday, Amazon shares had plummeted 66 percent from that peak.

Without splits, the high Amazon price would have been $1,356. If the company had let the shares rise, prices measured in hundreds of dollars would have stopped many investors from jumping in.

During the bubble, shares of Cisco Systems Inc. seemed far less of a gamble than Amazon's. Cisco was, and is, the world's biggest maker of computer networking equipment. But five splits from 1996 to 2000 helped boost Cisco stock to an adjusted $82 in early 2000 -- from which it has plunged 77 percent. Without splits, Cisco's peak price would have been $1,476.

Their Way

Sky-high Google shares may prevent investments from the small shareholders the company courted when it allowed IPO orders for as few as five shares. But Google wants to be different.

Like Buffett's Berkshire, it plans no dividends and refuses to feed earnings forecasts to analysts. Brin and Page also plan an annual letter to shareholders, hoping to match the one Buffett has made famous. Google does, however, continue to grant stock options, a Buffett no-no.

Google could sensibly split its stock if a price of $1,000 or more dimmed interest in the shares -- while still keeping the shares high enough to deter goofy buying. In 1996, Buffett was forced to effectively split Berkshire stock when ``promoters'' (his description) threatened to buy the shares and resell them in smaller denominations.

Top Dogs

The resulting Berkshire B shares traded at $2,805 yesterday and were the second-highest-priced U.S. stock after Berkshire A. Other high-priced U.S. stocks included Washington Post Co., in which Berkshire has a 22 percent stake and on whose board Buffett sits, and NVR Inc., a homebuilder (Ryan Homes) and mortgage banker. Google was just shy of the top 10.

While Page and Brin show good sense and Google profit keeps multiplying -- second-quarter earnings jumped more than four times -- the company's shares are still risky. Search-engine companies such as Yahoo! Inc. and Microsoft Corp. undoubtedly provide stiff competition.

The biggest risk: Virtually all of Google's revenue comes from selling advertising, which invariably slumps when the economy turns down. You wonder how high Google shares would have to rise to bring investors back down to Earth.

To contact the writer of this column: David Pauly in Normandy Beach, New Jersey dpauly@bloomberg.net

Last Updated: July 26, 2005 00:04 EDT