Barron’s has a reputation for hitting the darling of the moment in the groin, and this weekend that darling is Google. I have a WSJ sub, I’m not sure this link is open. If it’s not, highlights:
INVESTORS HAVE BEEN FIXATED on Google the past few weeks, as its shares have tumbled nearly 25% from a peak of $475 — and the fact is, there could be a lot more tumbling ahead. The share price could well be cut in half over the next year as the Internet giant grapples with growing competition from Microsoft and Yahoo!, increased pricing pressures in its online ad sales and mounting concern about what’s known as click fraud.
..Over the next year, both Yahoo! and Microsoft’s MSN portal are expected to improve their search offerings. In the second half of this year, Yahoo! hopes to improve its systems so that search-engine ads are more relevant to search results and therefore more likely to be clicked….
…Last week, news came out that Amazon.com has jumped into the game through its network of “associates” — Websites that have links to Amazon and receive fees when readers click the links and buy products. Amazon is offering to place ads from a third party on affiliates’ sites; Amazon and the affiliates would then split the revenue generated by clicks on the third-party ads….
..Finally, there’s the matter of persistent insider selling. As Google starts to spend the $5 billion it raised through two stock offerings in the past year and a half, its senior executives have aggressively sold shares. Co-founders Brin and Page have each sold more than $1.5 billion of stock. CEO Eric Schmidt sold $493 million. Omid Kordestani, senior vice president of global sales and business development, sold $793 million, and Ram Shriram, a director, pocketed $442 million, according to Thomson Financial.
Granted these folks all continue to have substantial holdings in the company, and most of the sales were part of pre-arranged selling programs that Google asked these executives to establish at the time of the IPO. Still, it’s notable that none have purchased shares in the wake of the recent stock pullback. Investors might be wise to follow what they do and not what they say.