Google's Paid Click Business Slipping - ComScore

Google (GOOG) shares are down sharply Tuesday morning after new data from comScore shows what appears to be a material weakening in the company’s advertising business.

Many analysts have commented on the data Tuesday morning, and most seem at least slightly concerned. Google’s paid-search data shows sponsored clicks were down 7% in January over December and flat year over year. UBS analyst Benjamin Schachter says the data leaves him “incrementally more cautious” on his outlook for the company and the stock: he trimmed his revenue estimates for Google and cut his price target to $590 from $650.

Scahchter now sees 2008 EPS of $20, down from $20.37; ‘09 goes to $24.10, from $24.58.

Some more comments from the Street on the new data:

• Jim Friedland, Cowen: “This data point indicates that a slowing economy may be having an impact on Google’s growth… we are maintaining our Outperfrom rating, but note that our estimates may be too high and expect the stock to remain under pressure in the near term.”
• Rob Sanderson, American Technology Research: “We do not think that underlying fundamentals have changed that much, if at all… While we do not see a specific catalyst on the near-term horizon, we believe that current levels offer a very attractive entry point.”
• Justin Post, Merrill Lynch: “Data adds risk to Google’s 2008 growth outlook highlighting that a decline in consumer spending could be causing reduced commercial search activity, and will likely drive some weakness in Google stock.”
• Youssef Squali, Jefferies: “Third party data suggests continued deceleration in paid click growth on Google properties, implying that Street estimates may need to come down if the January trend persists.”

Google Tuesday is down $30.41, or 6.3%, at $456.03, after dropping $22.36 yesterday.

Comments

[tessant:]

maybe its because they keep kicking people off of adsense. i got kicked off for no reason, and they wont even respond to my 5 emails regarding the situation.

2008 Feb 26 11:27 AM

[User 156263:]

December is a huge month for Search Marketing Budgets from small shops to the largest e-commerce sites. There is always a natural dip after the large Q4 ad spend for the holidays. Combine that with some large PPC advertisers in the lending / mortage markets and that combination is likely responsible for the dip.

2008 Feb 26 01:02 PM

[User 156301:]

Why do SEOs think anyone will ever give them sympathy?

They always show up whenever GOOG goes into a downtrend, as if that would make their deceptive whining any more palatable.

2008 Feb 26 01:44 PM

[User 138049:]

These "news" gets more and more ridiculous. Those fund managers need to get the analysts to come up with a better story than this.

2008 Feb 26 01:44 PM

[VSD:]

Check the Feb 2007 numbers. They were the same, also from comScore qsearch. The sell off has nothing to do with the data.

2008 Feb 26 02:28 PM

[Wedding Acc...:]

The answer is simple. If conversion rates go down then advertisers must spend less. At SensibleWeddings we have the best personalized gifts for bridesmaids and groomsmen at sensible prices.

2008 Feb 27 12:25 AM