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SEM Confirms Google Weakness

Google shares fell 3.1 percent in Nasdaq trading following comScore's announcement that paid-click growth stalled for the second consecutive month. Of course, Web watchers take comScore's panel-based data with a grain of salt. In a report, UBS analyst Benjamin Schachter pointed out that historically, comScore's paid-click data hasn't "correlated accurately" with his firm's Google sales estimates.

But in an interview with the Silicon Alley Insider, James Beriker, CEO of Efficient Frontier, which provides search engine marketing services, confirms Google's paid-click weakness in February. Beriker said internal data showed that financial services firms "significantly" scaled back spending in February, but then came back to market with more dollars in March. He suspects that financial services firms pulled spending as they reevaluated how best to contend with the market downturn. Beriker added that signs indicated further improvement in April.

Report author Henry Blodget points out that other SEM reports have been more positive, but even so, "we find it hard to believe that Google is not seeing at least some weakness in Q1. Analyst estimates for Q1 have come down, but we expect full-year estimates have to drop further. It's hard to imagine how the stock will mount a sustainable recovery in the face of this."

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