Has Google Hit A Wall Street Firewall?

Analysts Say Innovation May Salvage Web Firm's Stock Price After Drop In Ad Users

(CBS/AP)  Google's stock closed at $472 a share yesterday, down from an all-time high of $747 recorded Nov. 6 of last year. If you had bought 100 shares then, as of now you'd have a paper loss of more than $27,000.

Google stock's wild ride of late has some wondering if this Internet darling's bubble is about to burst.

For the past three-and-a-half months, Google stock has been in a near steady decline, shedding more than a third of its value.

At the source of the problem: Google's users. According to the research firm comScore, the year-to-year growth of users clicking on Google's sponsored links - the links that appear alongside regular search results - has leveled off.

Last November, with Google riding high, the stock seemed unstoppable, having risen from an initial offering of $85 a share to more than $700.

"Knowing what we know about Google's plans, it's hard for us not to see the stock getting to a thousand dollars within the next few years," Heath Terry of Credit Suisse said Nov. 1.

But that was then. Investors now are clearly concerned that Google, despite its ever increasing presence on the Web, may in fact have limits to its Wall Street power.

Daniel Roth, senior writer at Wired magazine, has a message to worried shareholders: breathe.

"What got the stock careening the other day was a report that Google's ad click-through rate - the number of people that clicked on the site's placed ads - had been basically flat from the last year. That might be because people aren't clicking on ads" the same way because of design changes, Roth told CBS' The Early Show.

"It certainly seems that Google is intent on changing the formula of figuring out ways of how their paid search works," Roth said. "They're constantly tweaking how and where they place ads, how you click on ads."

By changing the format of their ads, in order to try to reduce fraud and make the ads work better, Google now requires users to click on actual text rather than anywhere within the screen area near an ad's text. So while people are spending more time online, buying more online, and placing 60 percent of their search on Google, Roth said, those tweaks are changing the way people interact with ads.

While Roth wouldn’t hazard a guess on Google's future, long-term stock prospects, he recognized that the company is about more than searches.

"Google spends $1 billion a quarter on other projects - they have other things in mind. I'm sure there are many surprises Google has for us."

Among the new tools being introduced this week by the Mountain View, Calif.-based company: a free service designed for high-tech neophytes looking for a simple way to share information with other people working in the same company or attending the same class in school.

With only a few clicks, just about anyone will be able to quickly set up and update a Web site featuring wide an array of material, including pictures, calendars and video from Google Inc.'s YouTube subsidiary, said Dave Girouard, general manager of the division overseeing the new application.

"We are literally adding an edit button to the Web," Girouard said.

All sites created on the service will run on one of Google's computers.

Google acquired many of the Web-site tools when it bought a Silicon Valley startup, JotSpot, last year.

The tools are the latest addition to a bundle of applications that Google offers to consumers and businesses as alternatives to similar products sold by Microsoft Corp., one of Google's fiercest
rivals.

Google's latest service represents a challenge to Microsoft's SharePoint, which charges licensing fees. Google is unveiling its alternative just a few days before Redmond, Wash.-based Microsoft hosts a SharePoint conference in Seattle.

While Microsoft's programs typically are installed on individual computers, Google keeps its application on its own machines so users can access them from anywhere with an Internet connection.

By gradually introducing free versions of word processing, spreadsheet, and calendaring programs over the past two years, Google has been threatening to siphon revenue away from Microsoft, which makes most of its money from software sales.

Microsoft, in turn, hopes to take a bite of out Google's bread-and-butter in online search and advertising by buying Yahoo Inc. for more than $40 billion.

Google says more than 500,000 companies, government agencies and schools use at least some of its applications. The company won't say how many of those organizations subscribe to a premium version of its software suite, but the fees haven't made much of a dent at Google so far.

Last year, Google's software licensing and other products generated $181 million in revenue while $16.4 billion poured in from advertising.

[yongamerica]

Google stocks - a real warning sign that the US is in a downward slide into deep recession?

[alphaa10-2009]

Like Apple, Google surprises market analysts with its consistent innovation and energy.

Google''s enormous range of talent will keep this company in the limelight.

That Google stock price has not reached orbital level reflects the same market slump that drags down the Microsoft share price, as well.

The chief market asset for Google is its user base-- it continues to grow, and become more enthusiastic about Google and its web tool and desktop offerings.

[clevercandi]

What goes up, must come down!

[cbsblogger]

Trees don''t grow to the sky regardless of how much fertilizer is used. NASDAQ is littered with companies that had extremely high stock prices based upon unlimited optimism. Google''s stock price was driven by price and earnings momentum. Once that momentum is broken it will take a long time to recover especially going into a difficult economic time.