Google - Profits up + Share Price Down

Hardly a surprise, but everyone of my economics class this morning said that they used Google searches every day - welcome to the University of google! Fewer of them admit to clicking on the google ads that envelope most of every search you make but for Google that matters a huge amount. Yesterday Google announced a 17 per cent rise in profits to $1.2 bn in the final three months of 2007 but the share price took a dive on the news. Perhaps Facebook and the Credit Crunch are to blame?

Google seemed to have found it difficult to monetise the investment it has made in advertising on social network sites such as MySpace and Facebook and there are some claims in the papers today that a reduction in the volume of clicks on adverts linked to google searches is a forward-looking indicator of a recession in the United States economy. Revenue and profit numbers came in a little below city expectations and the stock market marked down the shares as a result. It is a mere dent in the forward march of Google, but a reminder that equity markets are forward looking and today’s share price does not reflect past performance, more the markets best guess as to the future profitability and growth of a business.

Financial Times: “Social network sites slow Google”
BBC news “Google profits disappoint market”
Google investor relations site