Feeds

Google shares plummet past $300, reach three year low

Wall Street ignorant of Mountain View money machine

Boost IT visibility and business value

Google's share price has dipped below $300 for the first time in three years, after some Wall Street guessmen decided the ad broker's revenues are on the wane.

After a high of $747.24 on November seventh of last year, the company's stock closed at $291 in Nasdaq trading yesterday, and today, it dropped another two per cent to $284.99.

Yesterday's fall was sparked by doom-and-gloom "research notes" from three Wall Street types claiming to know the future. "Search marketers almost universally expect Q4 to be the weakest they have ever experienced,” said Citigroup's Mark Mahaney, who chopped his fourth-quarter earnings-per-share guesswork to $5.03 from $5.17.

Meanwhile, Collins Stewart’s Sandeep Aggarwal dropped his all-of-2008 EPS estimates to $19.50 from $19.60, and Stanford Group’s Clayton Moran now puts his as low as $19.38.

All three analysts also cut their Google predictions for 2009. And their reports came hot on the heels of similarly dismal predictions from Barclays and Goldman Sachs.

Clearly, these analysts don't realize how easily Google can crank the dial on its top secret money machine. In the third quarter, as rivals like Yahoo! buckled under the crumbling economy, Sergey Brin and crew saw profits leap 31 per cent after tweaking their AdWords platform to allow more ads onto search results pages.

More ad coverage means more clicks, and more clicks mean more revenue.

Before the third quarter, Google had spent several months decreasing ad coverage in an effort to improve what it calls ad "quality." But now that the economic landscape has changed, the Oompah Loompahs have turned the dial the other way.

Yes, Google is still dependent on advertisers forking cash into their AdWords accounts. But advertisers are far more likely to abandon display ads before pay-per-click search ads - which make it much easier to at least imagine a return - and Google has monopolized the search market.

If any online ad biz can weather The Meltdown, it's Google - simply because it's the last place advertisers would turn away from. Or as Google chief executive Eric Schmidt put it: "We believe that [Google's Q3 results] reflect the fact as marketing budgets are squeezed, targeted ads are becoming more valuable to advertisers... And as consumer budgets are squeezed, people use the web for comparison shopping to hunt for bargains online and in stores."

When Google reports a healthy fourth quarter, we won't be surprised at all. ®

Next gen security for virtualised datacentres

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Fast And Furious 6 cammer thrown in slammer for nearly three years
Man jailed for dodgy cinema recording of Hollywood movie
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?