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Many search commentators have connected the rapid drop in Google’s share-values with their recent tussle with the US Department of Justice over its refusal to share search-records with the Government. As far as I can tell, the only thing connecting the two is the coincidence of timing.

As anyone with even a remote interest in search knows, the legal drama unfolding between Google and the DOJ fell out from the closet and into the public realm early last week, nearly a year after the DOJ initial request was complied with by Google’s rivals, Yahoo, MSN and AOL. Of the four major search engines in the United States, Google was the only one to resist the US Governments demand for information on searches conducted by its users.

Within days of the story breaking, Google share prices began to fall, showing a sustained decline for the first time since the search firm went public in August 2004. The sudden drop sent search journalists scurrying to their keyboards to make the unsubstantiated connection between the court case and the value of Google stocks.

What these commentators are neglecting to mention is that investors are becoming wary of the search sector, seeing the bulk of revenues coming from the single source of paid search advertising. Although Google AdWords and Yahoo Search Marketing continue to shower shareholders with positive results, Yahoo’s most recent financial numbers, filed last week, just before the Google share drop started, came in one-cent below investor expectations.

The dust-up between Google and the US Department of Justice is very important and something all search engine users should pay very close attention to; however, it is not likely the root cause of the drop in investor confidence in the search sector. Perceived instability in the long-term business model is far more likely the reason investment management firms and the investors who rely on their advice appear bearish about Google this week.

Late yesterday, LookSmart reported that they received a delisting notice from NASDAQ staff on October 13. Stating that shares in the search company had failed to remain above the $1.00 level, NASDAQ began the process of removing LookSmart from its stock-board under MarketPlace Rule 4450(a).

LookSmart is allowed to request an appeal which will delay delisting pending a decision from the NASDAQ Listing Qualifications Panel. In a press release issued by PRNEWSWIRE, LookSmart CEO David Hills said,

“Maintaining our listing on the Nasdaq National Market is an element ofour strategy to return this company to sustainable growth and increase stockholder value. We are taking appropriate measures to maintain our listing through the request for review and the stockholder meeting on a proposed reverse split. We look forward to providing an update on our operational progress on our next earnings call on October 27th.” (click here to read press release)

There are over 113 million outstanding shares of LookSmart. The majority of shareholders would have to give their approval before the reverse stock split could take place.

Yesterday, Yahoo released second quarter results that showed strong growth in revenues and profits. Following the ill logic of Wall St, Yahoo share prices fell over 10% on the news. Read more…

Yahoo had a pretty good day yesterday.

Yahoo reported better than expected revenues in a first quarter report issued early yesterday. Yahoo’s earnings from January 1 to March 31 were $205 million, up from the $101 million they reported last year. Excluding money shared with search partners such as MSN, revenues were up almost 50% to $821 million.

Wall Street analysts had expected revenues around $797 million. When monies paid to search partners are included in Yahoo’s quarterly revenues, the number rises to $1.17 billion.

Yahoo has several revenue streams resulting from years of content development and numerous advertising programs. Paid-search in the form of contextually delivered ads makes up the greatest part of their income, responsible for about 45% of annual revenues.

Yahoo showed growth against every standard used to rate it. Domestic revenues in the US increased by 37% to $819 million from the $599 million reported last year. International revenues increased a dramatic 124% to $355 million from $159 million in early 2004. Yahoo Japan also posted record revenues last quarter, showing a 34% increase in revenues over the same period last year.

Google shares jumped over $10 yesterday to close at 192.99, increasing in value nearly 3% over the day. Prices were expected to drop slightly as the six-month lock down on 177-million held by Google employees and early investors expired at midnight last night.

Trading was almost four times the average volume with 38,563,336 shares in play. Heaviest volumes were seen in the early hours with small spikes happening throughout the day. At the time of this writing, shares are trading on off-hour markets in large blocks at 193.32.

The 177-million that became available on Monday nearly doubled the amount that have become available in the six months since Google’s August IPO. Hungry investors were prepared to snatch up shares as quickly as they became available, hence the 3% increase in asking price.

For many NASDAQ watchers, Monday was seen as a sort of a Groundhog Day offering a favorable forecast on the search-sector. Investor confidence in Google remains quite high and that confidence helped the tech-board weather an otherwise lackluster day.

At the time of this writing, Google is up again, trading at 195.93.

Search engine watch has printed December 2004 stats from comScore Media Metrix detailing the market share of the major search engines going into the new year.

Google continues to dominate, generating 48% of all search results either directly or by providing results to smaller search firms such as the Excite Network. Yahoo follows a distant second with 32%. The pre-proprietary MSN came in third with 16% with Ask following fourth at 2%. Read more…

Just when we’re getting used to the idea that money is about to flow like it did at the end of the 90′s, dark clouds and volatility is visible on the horizon. Optimism springing from Google’s fourth quarter financial report should be tempered with memories of the industry wide alcohol poisoning suffered in the days after the last time we partied like 1999. Read more…

Google shares hit a record $210 in evening trading after the search giant released a quarterly report that beat most analysts’ expectations. Google considers itself the world’s largest generator of online advertising revenue, a claim founded on its triple digit growth from Q3 to Q4. Read more…

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Thursday, April 29th, 2004

Google Issues IPO

Well, they finally did it. For months rumours have been spreading around the Internet, investment and SEO communities about Google’s pending Initial Public Stock Offering (IPO). As of today, April 29, 2004, Google is a public company. Here is the short press release issued by Google earlier today:

Google Inc. Files Registration Statement with the SEC for an Initial Public Offering

MOUNTAIN VIEW, Calif. – April 29, 2004 – Google Inc. announced today that it has filed a registration statement with the Securities and Exchange Commission for a proposed initial public offering of its Class A common stock. A portion of the shares will be issued and sold by Google, and a portion will be sold by certain stockholders of Google.

Morgan Stanley and Credit Suisse First Boston will act as joint book-running managers for the proposed offering.

A copy of the prospectus relating to these securities may be obtained, when available, from: Morgan Stanley & Co. Incorporated , Prospectus Department, 1585 Broadway, New York, NY 10036 (tel: 1-800-364-5990) or Credit Suisse First Boston LLC, Prospectus Department, One Madison Avenue, New York, NY 10010 (tel: 212-325-1075).

A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State.

This week’s big news continues to be dominated by Google’s pending Initial Public Offering (IPO). Wall St. is buzzing with the billions of dollars that are about to be flowing from one side of the trading floor to the other side of the continent. While Google itself has remained mystically silent about its intentions, the mainstream media and the business press have been gawking at Google’s perceived plans for the past two weeks. Read more…

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