The Five Dumbest Things on Wall Street This Week

Search and Not Destroy Microsoft soft-pedals challenge to Google

1. Reyes of Sunshine

Google's (GOOG) stumble this week had everyone walking on eggshells.

Finance chief George Reyes stunned bulls on the stock Tuesday by admitting growth is slowing. "You can see that each and every quarter," Reyes told investors and analysts Tuesday morning at a Merrill Lynch conference. "We are going to have to find new ways to monetize the business."

Though it only stands to reason that Google can't post 86% quarterly revenue gains forever, Reyes' comments still socked Google's shares. They dropped more than $30 Tuesday, pressuring the Nasdaq and putting Google stock down 12% in two months. The Mountain View, Calif., company rushed out a late statement pledging to "improve monetization," but to little avail.

Google's pratfall was clearly felt across the Atlantic, where Microsoft (MSFT) was unveiling a characteristically aggressive plan to dethrone Google in the search market, Reuters reported.

Later this year, the Redmond, Wash., software giant will roll out a search engine that's twice as good as Google. At least that's how Neil Holloway, Microsoft's president for Europe, Middle East and Africa, sees it.

"What we're saying is that in six months' time we'll be more relevant in the U.S. marketplace than Google," Holloway told the Reuters Global Technology, Media and Telecom Summit in Paris. "The quality of our search and the relevance of our search from a solution perspective to the consumer will be more relevant."

Microsoft's newfound relevance wouldn't come a moment too soon, given that right now Google has 49% of the search market while Yahoo! (YHOO) has 21% and MSN has 11%, according to Nielsen/NetRatings.

Yet even sharp-elbowed Microsoft was tiptoeing around Google in the wake of Tuesday's trip-up. Holloway says Microsoft won't bundle the new search engine into the next version of its computer operating system, called Vista.

"If we did that," explains Holloway, "I don't think a company called Google would be very happy."

They don't call Microsoft Mister Softee for nothing.

Dumb-o-Meter score: 93. Everybody play nice now.

To view Colin Barr's video take on Nastech's entry in Five Dumbest this week, click here.