Google Shares Slip on Growth Rate Report
Google stock value had fallen sharply Tuesday after Google CFO George Reyes went on his Google Growth Tour on Wall Street which shed the light that Google is experiencing slower growth in search revenue and that it will need to focus on new avenues to generate more growth.
Here are the quotes which led to a loss of almost 15% in Google Stock Value over the last 48 hours :
* The Street : “Clearly our growth rates are slowing. You can see that each and every quarter. We are going to have to find new ways to monetize the business.”
* Merrill Lynch : “At the end of the day, growth will slow. Will it be precipitous? I doubt it,” he said. “I’m not turning bearish at all. I think we’ve got a lot of growth ahead. It’s a question of what rate.”
* CNBC : “The search monetization gains have been largely realized. Growth is slowing and now largely organic. We are going to have to find other ways to boost revenue. New products will yield some meaningful contributions. In no way am I bearish at this point,” Reyes added. “There is a lot of opportunity in local and mobile products and different offerings.”
The George Reyes Effect :
Google has since issued a statement clearing up the point of Mr. Reyes. It’s value seems to have risen a bit over the past few hours after the release of this:
As we have stated before, monetization improvements will continue to be a key factor in driving future revenue growth. We still see significant opportunities to improve monetization and intend to continue to focus our efforts in this area.
Moreover, as we have stated in our SEC filings, our revenue growth rate has generally declined over time, and we expect that it will continue to do so as a result of the difficulty of maintaining growth rates on a percentage basis as our revenues increase to higher levels.
If search growth is slowing a bit and Google monetization efforts of News, Local, and Shopping are taking more time than originally thought by analysts, where else can Google try to work its AdWords magic?
Greg Sterling shares his take on the matter :
* Pushing out more aggressively in other online ad vehicles (display, PPCall, etc.)
* Trying to go after more SMEs, which is challenging though not impossible, for all the reasons we’ve discussed at length
* Going offline. There’s a big Jefferson Graham piece in today’s USA Today about Google’s “offline” (traditional media) efforts
Unfortunate as slowing growth is for Google, it will make life much more interesting than it has been (how can it get any more “interesting?” you ask) — as Google takes some more “risks” and other companies are forced to react.