Google Gimpy as Tech Falters
05/15/06 - 10:18 AM EDT
Jonathan Berr
Remember how Wall Street rediscovered Google(GOOG Quote - Cramer on GOOG - Stock Picks) after last month's blow-out first quarter?
Remember how the shares zoomed to levels they hadn't seen since January? Remember how Wall Street's faith in the search engine giant, and in many of its tech peers, seemed restored? Well, the good feelings have worn off. Shares of the top search engine have fallen 10% since the April 20 earnings release, doubling the 5% drop in the Nasdaq composite index. Google shares dropped 8% in the final four days of last week alone, as tech investors everywhere ran for cover following nervous comments from Dell (DELL Quote - Cramer on DELL - Stock Picks) and Cisco (CSCO Quote - Cramer on CSCO - Stock Picks). Investors expect extraordinary things from Google. And by and large, Google hasn't let investors down. Its shares skyrocketed for a year and a half after the Mountain View, Calif., company first sold shares to the public in August 2004 at $85 apiece. In the last 52 weeks, the stock has traded as high as $475.11 and as low as $227.32. But last week's selloff puts Google down 10% for the year. And as that drop shows, for all its glorious recent history, Google has become just another high-wire tech stock. "They put up great numbers, but what's printed on the Street isn't capturing what the real expectations are, which are higher," says Ted Moore, an analyst with National City Private Client Group. His firm doesn't own Google among its $30 billion in assets under management. The company's performance remains impressive. Free cash flow in the first quarter was $480 million, up from $413 million in the fourth quarter and from $387 million during the year-earlier period. But weighing down the stock is a combination of factors, including lingering concerns about Google's declining growth rates, which pushed down the shares earlier this year.
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