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Google Finance, Govt, Policy and Business Issues Forum

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GOOG Stock Down 8% Today

 5:13 pm on Feb 26, 2008 (gmt 0)

I see Google's share price has taken a tumble, down from $750 to $450 today - is this the last of the dotcom crashes?

Afterall they have not created the next big idea and are still selling advertising for a living.

Will they bounce back or will investors now take a more realistic look at their business model?

Who knows perhaps Yahoo may even buy them :)

UBS cut its price target on Google Inc after U.S. paid-search data for January showed Google's sponsored clicks, the basis for its advertising revenue, fell 7 percent sequentially, and shares of the Web search giant tumbled more than 8 percent.

"While Google's search volumes were decent (up 39 percent year-on-year), actual paid clicks were flat...continuing a decidedly negative trend," analyst Benjamin Schachter said in a note.


[edited by: Brett_Tabke at 7:22 pm (utc) on Feb. 26, 2008]
[edit reason] added links to story [/edit]



 10:00 pm on Feb 26, 2008 (gmt 0)

I think Walkman makes a good point. The stock was a flying too high.

Take a look at this chart comparing the percentage price change in Google (in orange) to the S&P 500 over the last 2 years.
WSJ [online.wsj.com]
From two years ago, Goog is up over 20 percent, the S&P is up 8 percent.

So, is it a buy? If you're into buying stocks and can take some risk, you could do worse.

Maybe it's what you think of the Internet overall--has it matured or is their lots of innovation still to come? I vote for the latter.

Me? I invest in my own company.

[edited by: jatar_k at 11:04 pm (utc) on Feb. 26, 2008]
[edit reason] fixed sidescroll [/edit]


 10:00 pm on Feb 26, 2008 (gmt 0)

Maybe this is the reason they are pushing this into beta:

Should make Google more money...


 10:02 pm on Feb 26, 2008 (gmt 0)

I used to be 100% dedicated to Google Search. But a few months ago I switched to alt search using Yahoo and MSN.

For myself, I've found that 90% of what I search for can easily be found using Yahoo and MSN. To be honest, I still do revert back to google for some searches because they currently handle some things better, in my opinion. For example, Google handles celebrity heights much better than Yahoo or MSN. So when I was watching the Oscars it did come in handy, I suppose. :) But yes, there is no denying that up until now the others have not been as successful as G, there is no doubt.

Also,I think I could get 10% of Google's top 1% in 1 weekend using [lucene.apache.org ], some bubble gum, and a wire hanger. Basically just need to scrape/index wikipedia, right?

Try it, go to google and search for "Red Car", then Search for "blue car". Wikipedia is top 10 for both of these meaningless searches.

Other wikipedia SERPS in G: peppers(#3), red peppers(#1), pink peppers(approx. #30), auto peppers (#15), fried peppers(Not in top 100).

If I was a searcher and loved wikipedia so much, why wouldn't I just go to wikipedia.com and search in their search box? I personally don't feel its useful to have so much wikipedia results.


 10:21 pm on Feb 26, 2008 (gmt 0)

why wouldn't I just go to wikipedia.com and search in their search box?

Because if you don't spell it perfectly, you won't find it ;-).


 10:23 pm on Feb 26, 2008 (gmt 0)

Wow... Despite it's title this thread couldn't possibly be a better example of Google's success. That so many people take the company and it's success or failure so personally says it all. You'd think people were posting about their ex.

Is this whats happened then - they are reducing their click fraud aka accidental clicks and that has hurt their monthly click targets or have I got it wrong?

Exactly right... Except that it's far more than "accidental" clicks. Google has been making major changes regarding fraud control and traffic sources. I personally have no doubt that this is at least partially responsible for the drop.

A drop in paid clicks is not the same as a drop in legitimate clicks. From an advertiser's perspective the drop may actually be an indicator of significantly improved value.


 10:31 pm on Feb 26, 2008 (gmt 0)

>I don't believe that Google has more core inteligence(sic) than either Microsoft or Yahoo. Especially not as a combined entity.

From [matr.net...] -- "What's Google's Secret Weapon? An Army of Ph.D.'s" (June 5, 2004) concluding: "Microsoft has 56,000 employees, but its research group, with 700, is separate. Google has 1,900 employees, and no separate research group, so all 1,900, effectively, are charged to "boldly go where no one has gone before" (its words). You have to like Google's chances." and "[Google] has not released data about its Ph.D's for two years, but based on its history, the number is probably more than 100."

Microsoft, on the other hand, is "not heavy into Ph.D. recruiting." Another article, [ams.org...] , mentions that Microsoft was boasting of its plans to TRIPLE its number of mathematicians ... from 4 to 12, that is, which will put them on par with, say, some of the smaller state regional universities.

There really is a difference in logical ability between Math PhD's and computer science dropouts. (caveat: I'm not a Math major or a PhD. But I have known some of them...)


 10:48 pm on Feb 26, 2008 (gmt 0)

If I was a searcher and loved wikipedia so much, why wouldn't I just go to wikipedia.com and search in their search box? I personally don't feel its useful to have so much wikipedia results.

I can see the WALL STREET JOURNAL headline now:

"Wikipedia drives down GOOG stock price"

What next? Will Google's enemies circulate a photo of Larry Page and Sergey Brin in Somali clothing? :-)


 11:05 pm on Feb 26, 2008 (gmt 0)

is there one? Because I am totally a proponent of fear-mongering.

[google.com ]

Check it out, wiki is #5 result for Fear Mongering on Google, what a surprise.


 11:07 pm on Feb 26, 2008 (gmt 0)

They took a hit in revenue to clean up their clicks a bit with the whole clickable area thing, which will help improve their services in the long run.

Apparently no one told the day traders.


 11:28 pm on Feb 26, 2008 (gmt 0)

A little side bar:

Have you ever noticed how awesome MSN Maps is?

When you zoom up on your house, you can PAN the image to see the perspective from different angles. By far the best map program and way above both Yahoo, and Google.

[maps.msn.com ]

Directions: Click on the Compass on the upper left of the map and you will see your house from different perspectives, or from different directions using MSN Maps.


 11:34 pm on Feb 26, 2008 (gmt 0)

$750 for any stock seems way inflated. I didn't even realize that it had gotten that high.


 11:37 pm on Feb 26, 2008 (gmt 0)

I agree Lord Majestic. Google have been on top of the search engine pile for about 8 years now. Yahoo can't get close and Microsoft either for that matter.

Altavista and Netscape used to be the top of the heap too, now where are they? Times change. Google stock has jumped the shark. Today's loss was the biggest drop since its August 2004 initial public offering.

Even Alexa has no respect for Google lately. Google long occuppied the #2 spot on Alexa's list and now has dropped to #4 position.

mister charlie

 11:44 pm on Feb 26, 2008 (gmt 0)

I think it's a good thing most of you make your money form search marketing and not from picking stocks.

I'm not saying that GOOG is a good buy or not, but statements like " $750 for any stock seems way inflated." and "From two years ago, Goog is up over 20 percent, the S&P is up 8 percent." are indications that we should stick to discussing search marketing and steer clear of finances.


 11:53 pm on Feb 26, 2008 (gmt 0)

A technological wonder, Google is not.
Google is a combination of many things, all that have been collected or purchased from other areas of the web.

Google can only take full credit for creating "a few" things. The rest came from other companies.

I'll cite Alta Vista in this instance. In it's day, it was awarded more awards than Google, MSN or Yahoo can lay claim to combined today. It was a technological powerhouse. And look where it is now.

How much more or less vulnerable can Google be even today, when you look at Alta Vista and where it once was?

The stock will adjust, as advertisers tighten the purse strings with regard to the economy. It's a fact of life in any business.
Google can, and has proven itself on many fronts, but Google has yet to prove itself in the world of business. How well can Google handle economic storms, recessions and possible depressions, remains to be seen.

We then have some movement on the search scene, that involves Microsoft and Yahoo. This too, on it's own can prove to be a bit unsettling.

Reminds me of the day when Yahoo went in and bought Alta Vista, Alltheweb, and Inktomi.
Yahoo needed a search engine at the time, so they went out and bought 3 fully functional ones.
By this, Yahoo stayed Google's potential advancement into certain markets, primarily search, and was the leader in search traffic, over Google in the United States up until last year.

Now, as we can see, Microsoft needs a search engine, so it just stands to reason that Yahoo would be their likely choice. Yahoo has the goods in technology far and above that of Google. Yahoo is also, now the eldest of the big 3.

Would Google be bothered by this? Maybe, maybe not. But if Google handles this possible buyout like it did when Yahoo bought out Alta Vista, Alltheweb and Inktomi, then we'll most likely be seeing it's stock drop even further. We have to remember how flatfooted Google found themselves when they were no longer able to tap Alltheweb and it's index.

Alltheweb was a smashingly good engine as I recall, and I miss it, even to this day.

Google is an enigma, a fad, and a company all rolled into one. Yet too, google is neither of these 3 things wholly. Maybe it's time for Google to decide what it is they want to be. Deciding this may be the determining factor in the eventual worth of their stock.

I'm not in the least bit worried about Google. I use Google for tech search, which, incidently, they are quite good at, and I use Yahoo for everything else.

If Microsoft buys Yahoo, then I'll still have Yahoo, without the red wrapper. Either way, I'll still be able to search, using the engine most appropriate for that search.

[edited by: mcneely at 12:03 am (utc) on Feb. 27, 2008]


 11:58 pm on Feb 26, 2008 (gmt 0)

Yikes ! I came to check the forum for insight on the new terms and conditions. What a surprise to see this thread.

A lot of sites aren't doing as much adwords advertising including ourselves. We never had a positive ROI... it was either break even or lose money

Sure have been a lot of posts like that during the last couple of years. They should have listened more closely to the advertisers since they are the most important people of the program.
If the stricter rules regarding landing pages etc. are part to blame, maybe they could relax a few of the conditions.


 12:04 am on Feb 27, 2008 (gmt 0)

Hey Larry and Sergey, how about that "Smart Pricing" baby!


 12:04 am on Feb 27, 2008 (gmt 0)

Google is destined to F itself

- Smart Pricing
- Quality Score ($10.00 clicks, anyone?)
- Automated emails for everything
- General Arrogance of PHD's who never owned their own business
- rel="nofollow"
- Paid link bans
- Canceled accounts with no explanation

It would be nice not having to ask Google permission for everything I do on the Internet.

Die Google.


 12:12 am on Feb 27, 2008 (gmt 0)

The basis for the MFST takeover of Yahoo--the doubling of internet advertising in the next few years--flies in the face of the new half-baked data.

When the projections are that ad spending will be cut in half, instead of double--then Google investors should be worried. Same with MFST investors.

So believe whichever you think is more credible: 1) the advertising projections for the next few years; or, 2) one month of fragmented data.



 12:16 am on Feb 27, 2008 (gmt 0)

Matt Cutts: Google's stock prices aren't falling due to "real market" forces, we are actually just testing a new pricing "algorithm" to combat short seller spam. Each of our stockholders will get an automated email message within 2 - 4 days describing how these pricing fluctuations will help create a higher quality trading environment.

[edited by: BlueLeaf at 12:17 am (utc) on Feb. 27, 2008]


 12:18 am on Feb 27, 2008 (gmt 0)

Mark Mahaney, Citigroup analyst,

The guy should be watching his own company's stock, not Google's.


 12:22 am on Feb 27, 2008 (gmt 0)

EuropeForVisitors: What's all this fuss about, I'm looking at my trading account right now, and my GOOG shares are at 837.00 a piece.


 12:27 am on Feb 27, 2008 (gmt 0)

In my opionion Google has taken their customer service mentality for natural search and employed it with their paid services. Like PPC for example. When I pay a company hundreds of thousands of dollars I expect a little customer service.

I think that Google is so brainwashed from countless years of sticking it to the webmaster and completely shutting out people that customer service isn't Job #1.

They should hire the CEO from Rackspace because he has put toghether a fabulous team of customer service oriented people over there. The best experience I've ever had either online or offline with a company has been with Rackspace
[inc.com ].

While I will submit that I am not a customer of Google's for natural search, I am a customer for Adsense and Adwords. And as a customer I deserve better.

About 4 years ago Google sent me a little mini fridge in exchange for hundreds of thousands in advertising dollars, and now I want to send it back! And not because it broke on day 2 either.

[edited by: greenfrog at 12:28 am (utc) on Feb. 27, 2008]


 12:28 am on Feb 27, 2008 (gmt 0)

At 4:00 PM ET today GOOG was at 464.19; Down 22.25


 12:46 am on Feb 27, 2008 (gmt 0)

Google is destined to F itself

- Smart Pricing
- Quality Score ($10.00 clicks, anyone?)
- Automated emails for everything
- General Arrogance of PHD's who never owned their own business
- rel="nofollow"
- Paid link bans
- Canceled accounts with no explanation

It would be nice not having to ask Google permission for everything I do on the Internet.

Die Google.

Brilliant. Bravo.

Might I add that Google's stock is far from its eventual bottom, It had been stuck at the fibonaci 33% retracement spot for some time 750---500. Next stop is 375 (50% retracement).

G is so massively overvalued that it should hit about 200 by year-end. Competition is ramping up.

Big Google Mistakes:
1. Saying, "don't be evil."
2. Going public (automatically made them evil)
3. Alowing Matt Cutts to speak "unofficially" for Google.
4. reducing the clickable space on contextual ads (can you spell B-I-G B-O-O B-O-O?)

They're toast. Put some jam on them and enjoy taking a few bites.

[edited by: fearlessrick at 12:49 am (utc) on Feb. 27, 2008]


 12:46 am on Feb 27, 2008 (gmt 0)

At least Google doesn't have to worry about being black-listed for selling ads :P


 12:53 am on Feb 27, 2008 (gmt 0)

I think the biggest problem with google is very poor customer service to its paying customers - you don't take care of people who are paying you money and i mean 7 figures a year your stock deserves to go down. My self personally and many people i know try to allocate more money away from adwords because of risk and instability associated with adwords.

$10.00 min bids, daily minimum bids fluctuations.
We sell widgets keyword "widgets" gets poor quality score, we call for help and get none. What do we do: spend more money on yahoo, msn and much more in link acquisitions.

And now with "ultra broad match" on the way google might get some kind of short term boost in revenue but later on this move will lead to less relevant results higher cost per acquisition for advertisers and possibly lower bids accross the whole network. Reason being better targeting leads to higher CPC not the other way around.

If they really want to increase their CTRs and CPCs they should let us advertisers more targeting options for example what kind of internet connection does a user have? Dial up? DSL? Cable, T1? there is no reason trying to sell the cable user the dialup for example. More targeting options will lead the market to adjust its sell upward and everyone whould gain, google would get more money, advertisers will get better return on investment, and user would get more relevant-personalized results.

Google needs to get out of this broad matching game and get into the game of helping advertisers target their audience better.


 12:54 am on Feb 27, 2008 (gmt 0)

As far as companies go, I'm inclined to agree with this;



 1:08 am on Feb 27, 2008 (gmt 0)

This type of correction is a long time coming. There is nothing wrong with Google other than it was an overpriced stock. Reality is hitting the market. Google is run by mere mortals and the search market is not without its limits.


 1:34 am on Feb 27, 2008 (gmt 0)

BillyS just beat me to it. It's PE ratio was ludicrous and still is well out of whack for a company with essentially one form of revenue, and which already has saturation in its main market.


 1:35 am on Feb 27, 2008 (gmt 0)

more targeting options for example what kind of internet connection does a user have? Dial up? DSL? Cable, T1? there is no reason trying to sell the cable user the dialup for example

Uh? It seems to me an option that is only valid for cable internet access advertisers is a rather limited feature overall. I doubt that's what will "turn things around".


 1:46 am on Feb 27, 2008 (gmt 0)

Really? I'd say the opposite is true. They willingly gave up short-term ad revenue when they introduced AdWords quality scores, for example, and again when they reduced the AdSense click area to discourage accidental clicks. Everything I've seen suggests that they're more into long-term strategy than short-term tactics. (This thread is a good case in point.)
Of course, people who think like day traders may have trouble seeing the bigger picture.

EFV, introducing Quality Score did not hurt short-term revenue, quite the contrary. They introduced it in early August 2005 (fiscal Q3) and were trading at ~$285/share at the time. Subsequent to their Q3 2005 earnings report, however, the stock went through the roof (up to 390 within 2 weeks of the earnings report). The stock went up that much because Google totally blew away Q3 estimates, despite Q3 being one of their two seasonally weakess quarters.

Likewise, the AdSense clickable area change was a reaction to advertisers spending less on AdSense, not a unilateral move for their own long-term good. AdSense as a % of Google ad spend for G's top 5000 advertisers didn't grow in 2007 the way it did in prior years; earning back credibility from burned advertisers does not constitute long-term thinking any more than asking a judge for forgiveness signals remorse.

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