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Google Plummets As Stocks Surge

While the rest of the stock market surged, Google got stung yesterday as Fannie Mae and Freddie Mac investors divested their holdings in the search giant to cover their losses in the plummeting mortgage giants, who received a federal bailout yesterday. In the end, Google dropped more than 5% in Monday trading to close at $419.95, its lowest level since March. Google's all-time his is $725.65, reached in November 2007.

Why was Google in particular hit so hard? It could have been of things, analysts said, including the letter from the Association of National Advertisers that objected to Google's search partnership with Yahoo, or yesterday's damning Financial Times article about Android, the company's forthcoming mobile operating system. Later in the day, The Wall Street Journal also reported that the Justice Department has hired Sanford Litvack, antitrust chief to the Carter administration, to investigate Google for anti-competitive practices in online advertising.

Bank of America analyst Brian Pitz also cited a strengthening U.S. dollar as dragging Google down. Pitz lowered his target price for the company over the next 12 months from $700 to $690, but said it still remained "extremely well-positioned to benefit from the growth in display and branded advertising on the Internet." In an interview with The (San Jose) Mercury News, Pitz expressed his surprise by the sell-off. "I haven't seen volatility like this in a long time," he said. "It is a really skittish market."

Read the whole story at The (San Jose) Mercury News »

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