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What's 100 Jobs to Google? Maybe a Lot

Google's relatively tiny staff reduction may reflect on the company's longer-term prospects.

Updated from 1:46 p.m. EST

SAN FRANCISCO -- It's not a sign of the apocalypse that


(GOOG) - Get Alphabet Inc. Class C Report

is laying off 100 employees out of a workforce of more than 20,000.

However, the move does set one to thinking about the company's longer-term prospects -- beyond the time when this nasty, job-vaporizing recession is a thing of the past.

Specifically, when economic times eventually improve and Google's slowdown in growth is more clearly a function of the company's maturity, exactly what can Google do about it?

Even more specifically, does a price target on the stock of $600 -- the current high on the Street -- make any kind of sense anymore?

Shares of Google were off nearly 3% to $292 as the broader market insisted on staying in sell mode. The


was off 1.7% and has now lost 12% since the end of the Santa Claus rally on Jan. 6.

Google shares have fallen about 15% in that same period.

In a posting Wednesday on its official company blog, Google's vice president of "people operations" (only at Google) Laszlo Bock reiterated that the economic crunch has forced a reduction in hiring.

"Given the state of the economy, we recognized that we needed fewer people focused on hiring," Bock wrote. For Google, that has meant winding down nearly all contracts with external recruiters, and now, the elimination of 100 recruiters inside the company.

In addition, the company announced it would shut down a handful of side projects that had no serious impact on the bottom line.

Relatively speaking, this isn't horrible news. In what appears to be the worst economic times since World War II, Google continues to hire, while the degree of needed restructuring is to simply shut down a few operations that were currently as well known as

Glass Tiger


Just ask shareholders of




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, for example, how they liked what their companies had to say this week by comparison.

It's also certainly progress that investors and Wall Street analysts have accepted the idea that even Google's business can't withstand the components of the economic landscape in the U.S.: still-declining home values, an unemployment rate that may top 10% by the end of the year, and a consumer who is running out of money to spend.

Of course, many of the tweaks seen from Wall Street this week were just that -- smallish adjustments to estimates that were ultimately still bullish about Google's prospects. Barclays, for instance, brought down its revenue estimates by just 1% this week to account for a "modestly"(?!) weaker macro-economic environment, among other things, while pasting a $490 price target on the stock.

Other analysts have been less optimistic. A Jan. 6 note by investment firm Kaufman suggested that the company's search ad dollars were trending toward flat sequential qrowth in the first quarter, echoing a suggestion by Citi analyst Mark Mahaney that the first quarter of this year could show the first-ever


sequential growth quarter in search.

Kaufman took down its 2009 revenue estimates and slashed its price target to $407 from $552.

If the search industry, aka


, is going to start 2009 with flattish growth, the consensus expectation that the company's revenue will grow 12% this year must be seriously questioned (analysts at Goldman Sachs and RBC Capital did

cut their forecasts


If single-digit growth starts looking like a sure thing for Google in 2009, then you have to start looking at the 17% expectations for 2010. And so on and so on.

That brings up the ultimate sticking point for Google shareholders hoping for a ride back to the $700 level from which the stock began retreating just 13 months ago. All of this economic uncertainty has coincided with Google's place in the search market having never been stronger.

ComScore data from November showed Google with a 63.5% domestic core search volume share, up 2 percentage points.

The problem is, with not much of a market share left to gain, where is significant, new post-recession growth going to come from?

At this point, the company is still getting a benefit of the doubt that it will be able to leverage its search powerhouse into huge inroads in display advertising, mobile devices (via its Android operating system) and video.

It's the degree of success in those areas -- not search -- that will likely determine whether Google shares see $700 again.

Google shares closed Thursday down 0.7% to $298.99