Why Was Everyone Wrong on Google?

Pretty much everyone thought Google (GOOG) would miss last night. And more than half of those people thought Google would, at least implicitly, guide down. (See Google Q1 conference call transcript.)

Why was everyone wrong-sided on Google? Here are some possible explanations:

• Comscore (SCOR) data had people convinced that first-quarter paid click data was disastrous
• It just made sense that online ad spending would be cut, especially given financial services dependency, and Google has to be hurt if/when that happens
• Google missed (sort of last quarter), and everyone assumed the wheel had come off and stayed off

I lean to the first bullet: Blame Comscore. As some are pointing out, and as Comscore's aftermarket weakness is showing, this is turning into an acid test for Comscore -- and it's failing.

Great Moments in 'Directionally Correct' History

This morning on CNBC we were arguing about the blame to be accorded web traffic service Comscore in investors collectively leaning the wrong way on Google's earnings last night. After all, Comscore had tipped paid-click growth declining to 2%, which would have smoked Google's results on the quarter, but didn't happen. Instead, U.S. paid clicks fell to something like 9%.

I scoffed at that performance, suggesting that Comscore plain whiffed here. An analyst against whom I was put on-air said that we should go easier on Comscore, after all it was "directionally correct".

Directionally correct? Directionally correct? An undergraduate economist emerging from decade-long stasis an hour before the Google earnings call could have told you that a slowing U.S. economy would cause some slowing in paid clicks. Letting Comscore off the hook for being way, way off about U.S. paid clicks but being "directionally correct" is a joke, like getting busted for speeding in a school zone, and saying you might be over the limit, but at you had slowed down and were "directionally correct".

Anyone think of other great moments in the history of being "directionally correct"? I'm thinking of explorer La Salle landing in Texas instead of the Mississippi delta, or maybe when he sailed from there aiming for Canada, got lost, ended up back in Gulf of Mexico, and his crew murdered him. That sort of thing.

Comments

[chinesezodi...:]

or, the proud papa telling his neighbors that while his three-year-old digging a crater in the backyard didn't make it to China, he was directionally correct..................

2008 Apr 18 09:46 AM

[Ya de Madrid:]

I love Google, somehow I always buy it on the bottom

2008 Apr 18 09:58 AM

[bluesmoke:]

I'm so tired of "experts" being wrong....

2008 Apr 18 10:13 AM

[Ya de Madrid:]

jeje, I buy the stocks that I love, google is for years my home page, and I don´t read any experts

2008 Apr 18 10:19 AM

[globalmacro:]

I blame it on the pundits who think we are in a recession. Maybe we're not in a recession. Perhaps that why company after company is beating estimates.

2008 Apr 19 02:43 AM

[deaverb:]

Interesting and funny. Love the LaSalle ending....

2008 Apr 19 10:07 AM

[teeceel:]

well, i can imagine how the people who got out of their long positions felt. there must be a hell of a lot of poor bruised dogs nursing boot marks...........

2008 Apr 19 04:53 PM

[kdart:]

The answer is simple: nobody outside of Google really understands their business model. It is a complex one, and requires a lot of serious analysis (which is what they do). Some cursory "analysis" by outsiders, and the knee-jerk reaction of "investors", doesn't tell you anything at all about the quality of the company and their long-term prospects.

2008 Apr 19 08:47 PM

[LookingConf...:]

Analytic's firm Comscore has been strongly "attacked" since Google's report release, by both yourself and MSM. Maybe we see it different?

A good look at what Google have declared, almost vindicate the Comscore numbers, in spite of the market mostly being "told" otherwise by MSM.(Mainstream media).

www.topix.net/forum/bu...

Cheers!

2008 Apr 20 05:11 PM

[LookingConf...:]

It would be nice if a little more "contrary" thinking were permitted to be posted .....Twice (already) my comments have been removed.

"Have your say", but only say something in agreeance with the "theme" of the post, it seems?

How sad it that?

2008 Apr 20 05:54 PM

[LookingConf...:]

It's back !! Apologies!!

:)

2008 Apr 20 05:57 PM

[sf94127:]

Because a lot of analysts and other parties (e.g. Comscore) are so obsessed with finding the smoking gun they ignore fundamental reserach and journalism principles. In other words they suck at their jobs.

2008 Apr 20 11:38 PM