Don't miss

Replay


LATEST SHOWS

THE DEBATE

Colombia's Path to Peace: Can historic deal with FARC rebels work? (part 1)

Read more

THE DEBATE

Colombia's Path to Peace: Can historic deal with FARC rebels work? (part 2)

Read more

FOCUS

The rise of political tourism in the Middle East

Read more

ENCORE!

Music show: Video Music Awards, Rock en Seine and Puppa Lek Sen

Read more

YOU ARE HERE

The Gulf of Porto, a paradise of land and sea

Read more

IN THE PAPERS

Quarterback takes a stand by sitting down

Read more

FRANCE IN FOCUS

The hidden secrets of Les Invalides

Read more

IN THE PAPERS

Anger over restaurant's decision to deny service to Muslim women

Read more

BUSINESS DAILY

Fed rate hints show Brexit 'not a shock' for US economy

Read more

Google stock price sinks due to Web ad-slump fears

Latest update : 2008-02-27

Google's stock price sank Tuesday after a report hinted the boom of online advertising might end. According to industry-tracker comScore, the number of click ads dipped seven percent from December.

Google's stock price sank Tuesday in the wake of a report hinting that boom times may be over for the Internet darling's money-making online advertising.
  
The number of click ads in January was essentially the same as it was in the same month a year earlier, and dipped seven percent from December, a month known for major holiday shopping, according to industry-tracker comScore.
  
Google's stock price dipped below 448 dollars per share on Tuesday but was 462.55 dollars in after-hours trading at 23h00 GMT, representing a five percent drop for the day.
  
Investors evidently fear the comScore figures signal an end to Google's years of exponential revenue growth.
  
"The difficulty is that Google is being measured by high growth year over year that has been holding the stock price up," said analyst Rob Enderle of Enderle Group in Silicon Valley.
  
"Any reduction in growth rate is going to have a catastrophic effect. When the market is already nervous about going into a recession the combination will cause the stock to trade down."
  
Google was founded in 1998 by Stanford University students Serge Brin and Larry Page. Its stock price rocketed after its initial public offering price of 85 dollars per share in August of 2004.
  
Consistently strong earnings and its crown as king of Internet search drove the price to nearly 750 dollars per share in October of last year.
  
Google's quarterly profits have topped a billion dollars, with most of the money coming from Internet ads that advertisers only pay for if clicked on to activate online links.
  
However, Google has been confronted with concerns about "click fraud," bogus clicking on Internet ads by competitors or crooks.
  
Google has explained while discussing earnings in recent quarters that it is taking steps to reduce click fraud, and to improve relevance and reduce numbers of ads displayed on search pages.
  
Financial analysts at Bear Stearns and Citi Group issued reports expressing confidence in Google's future but saying they will be watching the company closely.
  
"One month, even one quarter, is not indicative of endemic problems," Enderle told AFP.
  
"There is a reasonable chance that Google may have mitigated the downside of this. We need to see a pattern before we say there is a problem at Google."
  
The drop in price of Google stock represents a buying opportunity, according to a written advisory issued by Bear Stearns.
  
"The shares are attractive at these trading levels, in our view," Bear Stearns wrote. "Google remains the dominant company within the online advertising industry, with healthy growth prospects."
  
Google's share of the Internet search market continues to grow incrementally, according to comScore.
  
Citi Group rates Google shares "buy/high risk" for reasons including its dominance in the "robust" online advertising market and its "underappreciated" potential to expand its services beyond Internet search.
  

Date created : 2008-02-27

COMMENT(S)