Google Falls Below $600

After hitting a one-year high Monday, Google shares have dropped 5% as investors get cautious.
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Updated stock priceNEW YORK (TheStreet) -- After a big year-long run, Google's (GOOG) - Get Report stock ascent has taken a bit of a breather.

Google hit a 52-week high earlier this week, but the stock fell 3% Wednesday and was down another 2% Thursday on no particular news.

Are these ominous beginnings of a Google swoon? After the 94% gain for the stock last year, it's a reasonable concern.

Analysts like Merriman Curhan's Richard Fetyko say no, this may be the kind of reset that investors appreciate.

"All indications I'm getting is that search-ad spending was very strong in the fourth quarter," Fetyko wrote in an email.

In a note Thursday, Fetyko raised sales estimates 19% for Google's fourth quarter 2009. Citing strong search traffic growth and ad price increases, Fetyko now predicts that Google will report fourth quarter sales of $4.86 billion, which is up from his prior forecast of $4.77 billion.

Fetyko reiterated his buy rating and lofty $750-to-$800 price target on Google.

The research note comes during a busy week for Google.

Earlier on Thursday, Google agreed to add $26 million in cash to the $106 million worth of stock it is paying for the acquisition of Web video-compression shop

On2

(ONT)

. The deal was expected to close late last year, but On2 shareholders felt they were owed more money given the 35% increase in Google's stock price since the deal was struck in August.

On Tuesday,

Google unveiled the

Nexus One

, an Android-powered "super phone" that it will sell directly to consumers and telco subscribers at carriers like

Deutsche Telekom's

(DT) - Get Report

T-Mobile

,

Verizon

(VZ) - Get Report

and

Vodafone

(VOD) - Get Report

.

Google's Nexus One phone

Some investors have worried that Google's first -- and only -- venture into gadgets may have an adverse impact on profits, possibly spoiling its partnerships with phone makers like

Motorola

(MOT)

.

But by Wednesday, those concerns diminished when Google's Android effort got a huge boost. The lone U.S. holdout in the Android front,

AT&T

(T) - Get Report

,

announced it would have five Android phones

selling by July. The phones will come from Motorola,

HTC

and PC giant

Dell

(DELL) - Get Report

.

-- Reported by Scott Moritz in New York

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