Google's Recent Moves Badly Hurt Shareholders

Google’s list of serious problems may be longer than it has been since the company’s IPO. The search engine company is all but certain to close Google.cn, its Chinese website, after an ongoing battle with the People’s Republic’s censorship policy.

Google is still struggling with the US Justice Department over a digital book deal with publishers and authors. EU authorities have started to look at the firm’s search monopoly

These and other problems have caused Google’s stock to significantly underperform the market this year.

Google decided to enter the hardware business last year and the launch of the Nexus One handset has not been successful. This has caused some Google followers to question whether slowing growth in its search business is causing the company to open businesses, like hardware handsets, with low margins.

Google’s stock is down 7% this year while the NASDAQ has risen 5%. Microsoft (MSFT) and Yahoo! (YHOO) have each posted better returns than Google over the period. That is odd, because analysts expect Google’s revenue to rise 21% in the current quarter to $4.9 billion and for EPS to rise to $6.54 from $5.16.

The ironic thing about the weakness in Google’s stock is that there is evidence that search advertising is improving. Because Googe has more than two-thirds of the market in the US and most of Europe, its earnings prospected are bright.

Wall St. is almost certainly asking whether Google should be taking the risks it is now when its core business does so remarkably well. The firm’s stock price says nearly everyone is skeptical about Google’s current direction

Douglas A. McIntyre