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"We'll have to see," he said.
Another investor concern: Google faces the prospect of a more formidable challenger for Web-ad dollars if Microsoft Corp. consummates its unsolicited takeover bid for Yahoo Inc. Google has complained that such a deal would hurt competition in Web services.
The search leader spooked investors in January when its 17% growth in fourth-quarter profit fell short of Wall Street's expectations. Chief Executive Eric Schmidt's reassurance that the slowing U.S. economy wasn't hurting ad spending on Google didn't help much.
Researchers have found that investors in high-growth stocks are quick to react to earnings misses, even narrow ones.
"It suddenly changes people's perceptions of the company," said Patricia Dechow, an accounting professor at UC Berkeley's Haas School of Business. "They wonder if the stock is priced too high or if the growth is gone. It can be hard for a company to regain momentum once investors change sentiment."
Shortly after the earnings report, Jay Wong, portfolio manager with Los Angeles-based Payden & Rygel, reduced the investment firm's stake in Google by an undisclosed amount, to about 50,000 shares.
"I think Google is going through a rough spot right now," Wong said. "We are just waiting for some good news to come out before we start rebuilding our position."
But in this jittery market, investors aren't giving Google the benefit of the doubt. Its shares fell nearly 5%, to $464.19, on Feb. 26 after Web measurement firm ComScore Inc. said Google users had performed 9% more searches in January than in December, yet clicked on 7% fewer ads. The research firm took the unusual step Friday of clarifying its report, attributing the drop to steps Google took to make its ads more relevant.
"This is the kind of market where you shoot first and ask questions later," said Georges Yared of Yared Investment Research, who personally owns 430 shares. "When you begin to ask the questions, you come to the conclusion that it is still one of the best business models in the world."
That's because Google still has a lot going for it.
While the company stretches its lead in search advertising, Microsoft's bid for Yahoo is distracting both of Google's rivals.
The European Union appears close to lifting the last hurdle for Google's acquisition of DoubleClick Inc., which would strengthen its position in online advertising. And Google appears unlikely to win the auction for wireless spectrum, which would have saddled the company with a multibillion-dollar bill and the hassles of running a nationwide wireless network.
Manning & Napier Advisors Inc. is buying again. After dropping its Google holdings to 245,000 shares late last year, the Fairport, N.Y.-based investment firm has already rebuilt its position -- and then some -- to more than 568,000 shares.
"Google's position is and will remain pretty formidable," said Jeff Donlon, the firm's technology equity analyst. "We have had some conversations again to think about buying some more."
Still, Google will have to do a better job of assuaging investor concerns if it wants its stock to keep going up, he said.
"There is a lot of hype around the company," Donlon said. "They can't necessarily think that that's always going to be there to support the stock."
jessica.guynn@latimes.com
Another investor concern: Google faces the prospect of a more formidable challenger for Web-ad dollars if Microsoft Corp. consummates its unsolicited takeover bid for Yahoo Inc. Google has complained that such a deal would hurt competition in Web services.
The search leader spooked investors in January when its 17% growth in fourth-quarter profit fell short of Wall Street's expectations. Chief Executive Eric Schmidt's reassurance that the slowing U.S. economy wasn't hurting ad spending on Google didn't help much.
Researchers have found that investors in high-growth stocks are quick to react to earnings misses, even narrow ones.
"It suddenly changes people's perceptions of the company," said Patricia Dechow, an accounting professor at UC Berkeley's Haas School of Business. "They wonder if the stock is priced too high or if the growth is gone. It can be hard for a company to regain momentum once investors change sentiment."
Shortly after the earnings report, Jay Wong, portfolio manager with Los Angeles-based Payden & Rygel, reduced the investment firm's stake in Google by an undisclosed amount, to about 50,000 shares.
"I think Google is going through a rough spot right now," Wong said. "We are just waiting for some good news to come out before we start rebuilding our position."
But in this jittery market, investors aren't giving Google the benefit of the doubt. Its shares fell nearly 5%, to $464.19, on Feb. 26 after Web measurement firm ComScore Inc. said Google users had performed 9% more searches in January than in December, yet clicked on 7% fewer ads. The research firm took the unusual step Friday of clarifying its report, attributing the drop to steps Google took to make its ads more relevant.
"This is the kind of market where you shoot first and ask questions later," said Georges Yared of Yared Investment Research, who personally owns 430 shares. "When you begin to ask the questions, you come to the conclusion that it is still one of the best business models in the world."
That's because Google still has a lot going for it.
While the company stretches its lead in search advertising, Microsoft's bid for Yahoo is distracting both of Google's rivals.
The European Union appears close to lifting the last hurdle for Google's acquisition of DoubleClick Inc., which would strengthen its position in online advertising. And Google appears unlikely to win the auction for wireless spectrum, which would have saddled the company with a multibillion-dollar bill and the hassles of running a nationwide wireless network.
Manning & Napier Advisors Inc. is buying again. After dropping its Google holdings to 245,000 shares late last year, the Fairport, N.Y.-based investment firm has already rebuilt its position -- and then some -- to more than 568,000 shares.
"Google's position is and will remain pretty formidable," said Jeff Donlon, the firm's technology equity analyst. "We have had some conversations again to think about buying some more."
Still, Google will have to do a better job of assuaging investor concerns if it wants its stock to keep going up, he said.
"There is a lot of hype around the company," Donlon said. "They can't necessarily think that that's always going to be there to support the stock."
jessica.guynn@latimes.com
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