Google shares dropped 6% yesterday, a fall of $22 billion in value in a day.
Largely because investors were concerned at Google's inability to maintain advertising prices.
In their own reported numbers, one critical measure is their 'cost per click' which fell -9% and this caused concern - notably on mobile devices where advertisers seem to want to pay less than the norm. Largely, this is because of a perception that the mobile screen is half the size of a PC/Desktop so they'll only pay, half.
The sale of Motorola Mobility to Lenovo at a discounted price, also caused worry. They sold is at 3 billion usd having paid over 12 bn.
All that said, the underlying performance of the company is still strong with Q1 revenues up +20% to over 15 billion usd and profits up +3% to over 3 billion usd. Although investors did expect more.
But one big, huge elephant in the room here, is the size of Google's market cap - a widely huge valuation. At circa 400 billion usd, a 6% slides wipes out a lot of value (circa 22 billion). It is the second highest market cap in America.
And frankly bears no resemblance to the level of profitability it's making although it has large cash reserves. There are growing concerns about the high values of tech stocks so even when the core business delivers great results, any shakiness, causes a major investor outflow.
This seems to sum it up.
Rumours abound, strong rumours, of Google opening its own high-street retail stores, starting in the US main cities this year.
As Apple know, having shops, can bring customers into contact with your brand in a real personal, helpful way. Especially when you're a Google and largely only known for Search. It's interesting too, a company moving from Web into retail stores - kind of like Amazon opening book stores - but this could be a plan just in time for Google Glass (or "Google Goggles" as most of us know them).
In retail you can touch, see, hold, demo the product and for something so new, it could be a great sales channel for glasses. Or indeed, a new world of wearable computing which is ahead of us.
They're likely too to come at the end of the year, "coincidentally" in time for the launch of Google Glass. They could also sell Chrome computing and of course, Nexus smartphones and tablets moving perceptions of Google from software to hardware. Google also owns the Motorola handset business.
Indeed following in the footsteps of both Apple and Microsoft who have their own retail operations, this would bring the Google brand into a new arena and reaching out to new consumers. High street, high profile retail, is a great Ad for a brand. Google already has a "sort of a" retail presence in the 'Best Buy' stores.
It may not be just about money short-term, but building a real brand long-term. Shops are one good way to do that.
