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Is Google's stumble an opportunity for investors?

(Moneywatch) Google's (GOOG) stock price, which has drifted lower since the company reported subpar earnings last week, is now at its lowest level in nearly two months.

When it comes to investing, as my CBS MoneyWatch colleagues Larry Swedroe and Allan Rothcontinually preach, trying to outguess or time the markets is a losing game. But it still bears asking if the slide in Google shares represents an overreaction to downbeat news or reflects long-term issues that could dog the search giant for months, or even years, to come.

Because of Google's meteoric ascent since its 2004 IPO, the company's occasional stumbles always draw attention. But Google's surprise 20 percent year year-on-year decline in profits came as a particular shock (and not only because the company's financial report was mistakenly released early).

Much of the alarm stemmed from a single, but troubling, number for a company like Google that depends on Internet advertising: The average amount that advertisers pay Google when consumers click on an ad fell 15 percent from a year ago, the fourth such decline in as many quarters. What's behind that decline is that people are increasingly accessing the Internet on mobile devices, and advertisers aren't willing to pay as much for mobile ads because of doubts about their effectiveness.

The amount of time U.S. adults spend on their phones and tablets has more than tripled since 2009, but mobile advertising draws only 1.6 percent of total online ad spending, according to research firm eMarketer.

Still, Google is in a much better position than most Internet companies to capitalize on the transition to mobile. Eventually, the huge increase in smartphones and tablets should increase "paid clicks" because more users will search on the go, not just when they have their computer open. Indeed, Google is already successful in this space. According to eMarketer, Google generates more U.S. revenue from mobile ads than any other company.

It is also important to remember that despite the ubiquity of mobile devices, the mobile ad market is really just starting. Last year U.S. mobile ad spending reached $1.45 billion, an 89 percent increase from 2010. eMarketer estimates it will hit $2.6 billion in 2012 and that it will grow at least four-fold in the next four years.

Google doesn't just make money off mobile ads, either. It has licensed its Android mobile operating system to numerous phone and tablet makers, akin to what Microsoft (MSFT) has done with Windows. And, just as Windows is now the dominant operating system for PCs and laptops, Google's Android platform is the worldwide leader in mobile operating systems, a trend not expected to change any time soon.

Despite Google's recent setback, meanwhile, the company's stock has seen a significant spike in recent months. On July 16 it was trading at $574, and for the two years prior to that it traded in a range between $550 and $660; so even at $680 it is outside of that range (I don't own the stock).

The stock may have been constricted by larger issues affecting the U.S. economy, but it is worth noting that prior to last week's all time-high of $755 per share, Google's stock had only once before broken $700. That was in December 2007, when the economy was soaring because of the soon-to-collapse mortgage bubble.