• Silicon Alley Insider, Thursday, January 24, 2008 12:15 PM

The Dow rode some serious swings on Wednesday to eventually close up nearly 300 points, but Google still fell 6 percent. Why? First came a report from an SEM firm claiming a sharp drop off in search spending towards the end of December. Then came December search data from Nielson Online, showing that Google had lost market share to Microsoft. And finally, comScore on Wednesday estimated that Google's quarter-to-quarter paid search growth in the U.S. had slowed to 8 percent from 11 percent. Citigroup analyst Mark Mahaney called the deceleration "surprising", but expected worldwide Q/Q growth to accelerate.

The result: Google has lost close to 100 points in the last week. Perhaps the market "is finally waking up to the fact that Google will not be immune to a recession," says Henry Blodget, who three months ago suggested the stock could soar to $2,000 a share. However, even at $548, the search giant still trades at an expensive price-to-earnings ratio of 42. But no matter how you cut it, the aforementioned data, independent of recession fears, "can't be spun as good news."

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