Tuesday, March 3, 2009

Google (GOOG) Announces "We are Not Immune" to Economy

Sometimes I shake my head at what people react to. Google (GOOG) is out with Earth shattering news, that a company who has a heavy reliance on spending from financial firms and autos (along with small businesses) is not immune from the economy! Stop the presses! The stock is down -3.5% after hours and taking stock market futures down with it, as people assumed Google operated in a parallel universe.

This whole NASDAQ outperformance, specifically of a large cap tech kind, really bothers me - as if these companies live in utopia where the real economy does not affect them.

Via Silicon Valley Insider

Q: On search side, economy question. Query growth remained strong for a while, our data indicates still there. CPC has been declinng, was negative in last quarter Any trends you can update on how you play through a more difficult economic environment?

A: Economic situation pretty dire. Combination of what we've seen does not appear to have a bottom. People are using the Internet more. Obviously will affect online ad market because our systems are so tightly tuned. It will eventually be reflected in CPC, CPM. We are not immune to this. We may be better positioned from ad perspective, but ultimately the real pain felt by companies worldwide will sometime translate to our world.

Again... simply news that totally took us by "surprise": Google operates in the real world... wow. Worthy of at least 3 hours of block coverage on CNBC tonight. It really makes you wonder what 'assumptions' people driving stocks up and down every day are going under. I guess denial still is order of the day despite a 50%+ haircut in the markets.

We pointed out the issues of Google the first few weeks of blog life [Aug 30, 2007: Google Can't Get Any Traction - is This Why?]
  • financial advertisers account for more than a third of all web advertising.
  • half of the top 10 were mortgage or credit-related marketers
I guess we're just early.

Technically the stock broke below its 50 day moving average (finally) today after being impervious to most of this selloff. But for 130 points since Christmas I guess the assumption was Google operated in happy land.

No position

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