Google lost yet more of its shine this week after a senior executive admitted growth at the company was slowing.
Shares in Google fell 13% in early trading on Wall Street after chief financial officer George Reyes told an investor conference in New York that ”growth will slow”, although he added: ”Will it be precipitous? I doubt it.”
Google’s stock had risen rapidly since it floated at $85 a share in August 2004, but signs of waning faith in the business emerged in January when its latest quarterly results statement missed some analysts’ forecasts.
Reyes said Google must find other ways to ”monetise” its business. Google generates 99% of its revenues from Internet advertising and is seeking other sources. Alongside the more esoteric, such as Google Earth, the company has been moving into services that keep users returning to its site. It has launched an e-mail service, Gmail, and an instant messenger-cum-Internet-telephony service called GoogleTalk.
Google has been developing more niche search products such as Google Scholar and Google Books.
But revenues from these new services are small and with $6-billion in the bank there has been speculation that the company will buy itself growth through acquisitions.
Two months ago, Google nearly doubled fourth-quarter profits to $372-million but missed analysts’ targets, blaming a higher tax rate and weak advertising. Market jitters were exacerbated in February when Barron’s, the business magazine, warned that Google’s share price could halve this year in the face of competition from Yahoo! and Microsoft. — Ã‚