Google shares close at $291, Yahoo just above $10
Search giant's stock price closes below $300 for first time since 2005, as widespread predictions of an ad recession prompt analysts to slash company estimates.
In a bad day for publicly traded tech companies, Google's stock shares closed at $291 on Wednesday, marking the first time since 2005 that the Mountain View, Calif., dot-com's stock price has slipped below the $300 mark. The $291 is a 6.57 percent drop for the stock.
A parade of negative reports and estimates about ad spending in 2009 have led Wall Street analysts to cut their earnings estimates for Google, which can credit its explosive market valuation to its pioneering search-advertising technology.
Citigroup analyst Mark Mahaney characterized expectations for the fourth quarter of 2008 as "the weakest they have ever experienced," trimming his estimates for Google's earnings by 3 percent.
Also weighing on Google is the report that cell phone giant Verizon may be close to ditching Google as its default mobile-search provider in favor of Microsoft.
It was just more than a year ago, on November 1, 2007, that Google's stock price climbed above $700 for the first time, reaching a high of $741 later that month and leading some analysts and bloggers to speculate that it could hit $1,000 in due time. But by mid-January, the once-unsinkable stock had fallen below $600 and has not yet recovered.
Meanwhile, fellow Valley stalwart Yahoo is in danger of seeing its stock price dip below $10 for the first time since 2003, when the industry was still recovering from the aftermath of the tech bubble pop. Yahoo's stock closed at $10.34, with a low point of $10.02. U.S. Securities and Exchange Commission filings recently revealed that the company has a $73 million bill resulting from failed negotiations with Microsoft over its acquisition bid, corporate raider Carl Icahn over his board takeover, and Google over a proposed search-ad deal.
The Google-Yahoo search deal dissolved at Google's behest, when antitrust regulators threatened legal action, and the company said "pressing ahead risked not only a protracted legal battle but also damage to relationships, with valued partners." A jilted Yahoo publicly expressed dissatisfaction with the decision.
Microsoft had offered to buy Yahoo in a deal that ultimately would have valued the company at $33 per share. Yahoo rebuffed the offer, and, according to some, it may very well regret doing so now.
CNET's index of overall tech stocks was down nearly 5 percent at the end of trading Wednesday, reaching 1,048 points.
In broader economic-downturn news, Treasury Secretary Henry Paulson announced earlier on Wednesday a change in direction for the $700 billion U.S. market bailout, putting more focus on consumer debt and home foreclosures than on sweeping rescues of ailing mortgage-backed securities.
This post was expanded at 1:38 p.m. PT.