28.2.08

"The Sky is not Falling on Google"

mingram@globeandmail.com

Free plug for: Mathew Ingram

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If it wasn't already obvious that the stock market has a bad case of nerves, it became abundantly so this week when a Web-traffic report from comScore was released with some unflattering numbers, and investors obliterated more than $15-billion (U.S.) worth of Google's stock market value.

The report suggested that the click-through rate on Google's text ads - the ones that show up when you type in a keyword at the Google site, and the ones that show up on other websites as well - was virtually unchanged in January compared with a year earlier, and was about 12-per-cent lower than the click-through rate in the immediately preceding quarter.

For a company that has been growing at double-digit rates for the better part of four years, and has been assigned a premium stock market multiple as a result, that kind of news is enough to get anyone's attention.

But does it justify such a dramatic drop in Google's shares? Probably not.

Read complete report here