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Google on Track for Solid Quarter

This seemed to have allayed fears about Google's ability to perform in a down economy, although the company is certainly not without its issues. Shares now trade around $530 -- nowhere near their $700 levels in November.

"We would characterize sentiment as mixed," Anderson wrote in his research. "The deceleration in U.S. revenue growth, decline in paid-click growth and macroeconomic concerns hold back enthusiasm for the stock."

Growth Leveling

Indeed, revenue growth for Google has been on the steady decline, falling to 45.7% in the first quarter compared to a year ago, from 51.9% in the fourth quarter vs. a year ago. In the third quarter, revenue growth was up 61.5% from a year ago.

Likewise, Google's paid-click growth had been slipping, to 20% in the first quarter, from 30% in the fourth quarter and 45% in the third quarter.

Mark Mahaney, an analyst for Citigroup, expects paid-click growth for the second quarter to slip again, to 16%. But some of that may be offset by accelerating cost-per-click growth, he added.

Mahaney further noted that Google's international revenue as a percentage of total revenue was 51% in March and 48% in December, up about 400 basis points year over year for both the first and fourth quarters.

"As with other leading Internet companies like eBay (EBAY) and Amazon (AMZN), we believe this significant international exposure has been and can continue to be a substantial driver of top-line growth," Mahaney said. "In the Internet advertising market, we view international growth rates at as much as twice those of U.S. levels."

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