« Live from Apple: iPod Hi-Fi | Main | Step away from repetitive stress injury »
Reality kicks in for Google's stock price
Investors who believed that Google had a magic wand that allowed it to turn web visitors into highly profitable money machines today were dealt a severe blow.
At the Internet Advertising, Information and Educations Conference that was hosted by Merrill Lynch in New York, Google CFO George Reyes explained that the company's past stellar growth was merely the result of a technical project that allowed the search engine to better serve online advertisements.
But more importantly, the company by now feels that is has done all the tweaking it can do to its advertising system. There is no way to sugar-coat this: future revenue increases for Google will be less stellar.
A full transcription of Reyes' remarks (webcast here - section is around 28:00 into the recording) on this topic:
"We went through a period of 18 months where we had a revenue force initiative, a team of very bright technical engineers that were trying to tweak and optimize the ad system in a very responsible way. That sort of paid off nicely with the fruits of that labour. What's happened since then is: we got so good at that, that really most of what is left is organic growth, which means you have to grow your traffic and you have to grow your monetization. We are, clearly our growth rates are slowing and you see that in each and every quarter and we're going to have to find other ways to monetize the business."
After reality sank in, investors dumped their Google shares, which lost about 7 per cent in the stock market today.
Didn't they learn from the dotcom bubble that no company or new economy can cheat the laws of economics?
Tags: google
February 28, 2006 at 11:01 PM | Permalink
TrackBack
TrackBack URL for this entry:
http://www.typepad.com/t/trackback/24766/4359093
Listed below are links to weblogs that reference Reality kicks in for Google's stock price:
Spanish
