Shareholders pummeled Google (Nasdaq:GOOG) today as they decided 52 percent sales growth wasn't up to their expectations. It makes you wonder if they will increasingly become a victim of their own success?
The kind of growth Google has enjoyed over the years can in no way be sustained, it's simply not possible for any company to do that on a continuous basis.
Everything else for the company in the quarter was solid too, as they grew net income by 12 percent from over last year, ending at $1.21 billion. Total revenue increased to $4.23 billion.
Another, but unsurprising failure for Google, was it's inability to generate significant ad revenue on social networking sites, something no one has been able to meaningfully do without changing its nature. MySpace (NYSE:NWS-A) has been successful because of its other features which ads can be placed against.
Even if a company is successful in generating ad revenue on social networks, it is far less profitable than other areas of ad revenue.
Google is especially vulnerable to ad trends, as 99 percent of its revenue is generated that way.
YouTube, in spite of its growing web traffic, continues to be a problem to the company as far as making money from it. That will probably not change for some time to come, although the company says they're going to try new ad formats there sometime in the near future.
One positive about the drop in Google stock, is it's getting rid of all the speculators, and probably will start to attract more of the investor in the times ahead.
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