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    GOOG Takes Hit, Keeps On Rolling

    By Stock Charts | July 22, 2007

    I’m sure most if not all of you are aware of Google’s (GOOG) “disappointing” second quarter results:

    Propelled by the online advertising boom, Google Inc. reported late Thursday that revenue surged to $3.87 billion, up 58 percent from the same time last year — a gain that was slightly above analyst estimates.

    But Google’s profit margins narrowed as management ramped up spending to hire additional employees, develop new products, open more data centers and buy more content for its Web sites. A change in how the Mountain View-based company accounts for employee bonuses also weighed on the results.

    Add it all up, and Google was left with a 28 percent increase in its second-quarter earnings, by far its slowest growth since becoming a public company in August 2004.

    Investors expressed their dismay by sending Google shares down by as much as $38.99, or 7 percent, Friday. The stock later fought back to finish at $520.12, down $28.47, or 5.2 percent. The harsh reaction erased about $9 billion in shareholder wealth.

    Source (AP)

    However, despite the miss, Google’s stock rebounded nicely off the 50 DMA and the long term prospects have not changed. Part of this miss was attributed to a change in the way Google handles costs, leading to lower profit margins. Some analysts have suggested (a bit snidely) that if Google had been more open with their accounting and spending factors, the stock would not have been hit as hard. However, despite the overall negative analyst reaction, most of them still maintain a positive rating on Google’s stock.

    Some are also concerned about Microsoft’s Live Search engine gaining a larger market share, but this is easily attributed to Microsoft’s new Vista OS. While it may garner Microsoft a greater market share in the short term, Microsoft and Yahoo will both need to focus on improving relevancy if they have any hope of overtaking the big G. In the mean time, my money’s on Google. Here’s a look at the stock chart:

    Google Stock Market Chart

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    Topics: Commentary | 2 Comments »

    2 Responses to “GOOG Takes Hit, Keeps On Rolling”

    1. Blain Reinkensmeyer Says:
      July 22nd, 2007 at 10:12 pm

      Mark, I posted this chart as well, very interesting bounce off the 50 DMA. What confuses me though is what will happen this week. Ya the stock moved back up and closed at about its intraday highs, but if the 50 is tested again it may fall. Is good really going to fill that gap immediately or do we have some time on our hands?

    2. The Matador Says:
      July 23rd, 2007 at 6:51 am

      I agree that it’s really too early to determine whether the bounce will hold. I still feel bullish on GOOG in the long run, though. I believe that management at Google know what their doing, and by bucking Wall Street convention and trying to hit quarterly targets, they are doing what’s best for Google in the long run.