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."
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."