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The online version of the venerable financial publication led off its free week of online access with a cover story about Google, a brand that can draw a lot of readers to a website.
Source: WepronewsBarron's does to Google what Vice President Dick Cheney did to a hunting buddy over the weekend, catching the company with a shotgun blast over its future prospects.
Fortunately for Harry Whittington, they were hunting quail and thus carrying birdshot loads in their firearms. Barron's has chosen the 12-gauge shotgun approach, loading up with Brenneke slugs and taking cold aim at the search advertising company.
Taking an example where one very optimistic analyst's revenue estimate for 2006 is 20 percent off the mark, along with some other financial considerations, Barron's thinks Google would end up with earnings 30 percent lower than projected. Together the various factors could add up to an icy-cold water shrinkage of Google's stock price to $188 per share.
A few factors could contribute to such a Google doomsday scenario, all focused on Google's single dominant revenue stream - online advertising. The article cited the rise of competition from Yahoo, MSN, and even Amazon, which was recently found conducting a quiet beta test of contextual advertising with a few sites.
Click fraud may also figure in future Google problems. It is widely known that people use software and teams of users to click away at ads and drive up revenue for certain site publishers. Google told Barron's that losses connected to click fraud are "non-material," and the company actively addresses the problem.
Desirable keywords on Google have become very pricey. With the competition for those keywords through AdWords auctions heating up and driving up costs, some retailers scaled back their spending. Barron's cited flower seller FTD as one example:
Flower giant FTD Group (FTD) recently complained about the high price of search advertising. "During the Christmas season, certain online search engine costs increased significantly over the prior year, and as such we made the decision not to pursue the resulting high-cost order volume," said Michael Soenen, chief executive officer.
Barron's noted that a request to Google to make executives available for their article was declined. For readers seeking a glimpse of Google's top trio, CEO Eric Schmidt and founders Sergey Brin and Larry Page, Time provided a cheerier look at the company execs who were playing with Lego toys.
(See, Barron's, you should have made a Mindstorms NXT set available as part of the request for executive access.)
