Google in the eye of a slowdown

By Scott Moritz

Google (GOOG) is sitting squarely in a troubling three-month slowing trend, and only some deft moves can spare the search giant from an apparent first-quarter shortfall.

ComScore numbers once again confirmed that people are searching less and clicking on advertisements at a much slower rate as the economy tanks and consumer spending pulls back. In March, Google’s paid clicks grew 2.7% over year-ago levels putting first-quarter paid click growth at 1.8%, a big slowdown from the 25% rate in the previous quarter and well below the 48% pace in the third quarter.

When your revenue engine is almost entirely fueled by Internet searches and ads clicks, it’s probably wise to watch your gauges. Analysts’ estimates for Google’s first quarter have been cut sharply ever since this trend was first spotted in January. But Google fans say the company has been honing its search efficiency and raising prices to offset the slump.

Additionally, some analyst point to Google’s ability to increase its U.S. market share to 55% in March from 53% at the beginning of the year.

Google reports earnings after the market closes Thursday. Analysts are looking for adjusted earnings of $4.52 a share on sales of $3.61 billion in the first quarter ended last month. That calls for a top line growth rate of 42% over last year’s revenue level.

If the company made adjustments, the chances of disappointing Wall Street will be limited. But if ComScore’s numbers are any indication, writes Henry Blodget of Silicon Alley Insider, Google “will miss by a mile.”

Back to main column

Filed under Google, Internet, Yahoo

6 Comments | Add a Comment | Email

Digg

Facebook

How does henry blodgett still have a job. He blew the dotcom bubble, now he predicted google would miss by miles. Does anybody take this guy serious. Google is a company that comes along once in a lifetime. Grab it while you can.GO GOOGLE

Posted By JOJOANT PORT ST LUCIE FL : April 19, 2008 11:16 pm

FYI: Were I work (a major player) Google AdSense has started to be blocked in the past week.

Reason: questionable businesses with questionable morals placing inane and misleading advertising.

Posted By Dreamdeceiver, Silcone Valley : April 17, 2008 7:32 pm

Way to call it, Scott and Henry! Brave article one day before the earnings report. Or nutty, I am not sure which!

Posted By Todd : April 17, 2008 6:13 pm

THose of us with more than three functioning brain cells have understood from the start that Google’s business model is flawed, that it took only economic boom times into acount in regard to revenue, and that it was growing so fast that it had become its own bubble. Google is a short term investment, but that short term has past.

Posted By William, Atlanta : April 16, 2008 2:23 pm

We spend more than a $1 million a year on Google AdWords. We’ve been lowering our bids as other advertisers are dropping off during the slow down.

Now is a great time to adjust your Google campaigns and slash these outrageous cost per clicks.

If everyone just managed their campaigns, Google could lose billions.

Jon Hoch, Founder & CEO
PressureWashersDirect.com

Posted By Jon Hoch, Bolingbrook, IL : April 16, 2008 1:41 pm

What about ROW?

Posted By H.W., Little Boston, CA : April 16, 2008 11:22 am

CNNMoney.com Comment Policy: CNNMoney.com encourages you to add a comment to this discussion. You may not post any unlawful, threatening, libelous, defamatory, obscene, pornographic or other material that would violate the law. Please note that CNNMoney.com may edit comments for clarity or to keep out questionable or off-topic material. All comments should be relevant to the post and remain respectful of other authors and commenters. By submitting your comment, you hereby give CNNMoney.com the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying information via all forms of media now known or hereafter devised, worldwide, in perpetuity. CNNMoney.com Privacy Statement.