Google succumbs to US slowdown
“A highflier is losing altitude,” said Miguel Helft in The New York Times. The world’s largest search engine has already seen its revenue growth fall, from 92% in 2005 to 73% in 2006 and 56% last year. And Google shares, down nearly 40% from November’s peak, slid 4.6% on Tuesday after researcher ComScore reported that paid clicks – Google is paid when consumers click through an advertisement carried by the search giant – ground to a halt in January.
They totalled 532 million, down 0.3% year-on-year, having slowed for the previous three months. “There are pretty strong signals now that the economic slowdown is having an impact on consumers’ behaviour online” and thus hampering Google, said Stanford Group’s Clayton Moran. Analysts have rushed to reduce their price targets.
Despite the slowdown, Google remains a “highly profitable company that is outpacing all of its major competitors”, taking a 28% share of the fast-growing online advertising market in the US last year against 19% in 2005, said Helft. No doubt the online sector has plenty of growth ahead of it in the longer-term, but this news has shown that Google is not immune to economic trends, said Robert Cyran on Breakingviews.com.
The company’s growth figures could now go into reverse as advertising enters a downswing: judging by the recent news from the consumer sector, “there seems little reason for optimism on either bricks or clicks”.
GOOG: $464; 12m change 0%
