Despite IPO revisions, boffo bow expected

Once little more than an algorithm built by two Stanford grad students, Google is set to make its debut on the public markets today as a major media player.

The Net’s dominant search engine received approval from the Securities and Exchange Commission on Wednesday to close the auction of its shares. Company is expected to begin trading on the Nasdaq today under the ticker symbol GOOG.

Google, which is selling its IPO shares via an unusual online auction, recently lowered the price at which it expects to offer the stock to between $85 and $95 and reduced the number of shares to be offered. It is expected to raise $1.7 billion-$1.9 billion, down from an initial estimate of more than $3 billion.

Nevertheless, most on Wall Street are projecting Google will finish its first day of trading with a market capitalization of around $25 billion. That would make it about two-thirds the size of the Net’s media heavyweight, Yahoo!, and a third the size ofTime Warner.

Company’s search-related ads have transformed online marketing and played a large part in allowing the Net to emerge from the doldrums of the dot-com bust as a fastest-growing advertising medium. And with nearly everyone online Googling on a daily basis, it’s one of America’s best-known brands.

Many on Wall Street say Google will have to think of itself primarily as a media company that satisfies customers and delivers them to advertisers.

“Google has to go through a managerial transition that will run it as a technology-enabled brand,” said Charlie Di Bona, a software analyst at Sanford Bernstein. “Google is really a distributor of information and content much like a television network.”

For inspiration, Google might look to competitor Yahoo! After gaining fame as a technology company and riding the dot-com boom, Yahoo! has been transforming itself into a savvy media entity focused on keeping customers and advertisers happy.

That change has been spearheaded by CEO Terry Semel. The former Warner Bros. topper was recruited because of his experience heading a studio — skills that have proved much more useful in the Internet space than many techies anticipated.

Google has already begun extending its brand to keep customers on its sites longer, adding a news aggregation, a shopping comparison engine and an email service (currently in beta testing).

But it’s also facing serious competition. Yahoo! has invested heavily in its search service, which provides related advertisements similar to Google. And Microsoft is previewing its own new search engine, which integrates the Internet and a user’s hard drive when answering queries.

Time Warner-owned America Online also is pushing harder for Internet marketing bucks with its recent $435 million purchase of Advertising.com, while former Viacom chief operating officer Mel Karmazin hinted that his conglom was looking at investing more in the Net.

The reasons are clear, as execs ogle Google’s 177% revenue growth last year and net profit of $79.1 million on $700 million in revenue in the second quarter this year alone.

That performance means Wall Street has high expectations now that it will be watching a public Google’s every move.

Whether as a media company, technology startup, or something in between, Google will have to please Wall Street by pleasing advertisers.

Follow @Variety on Twitter for breaking news, reviews and more