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Last Updated: Thursday, 2 March 2006, 07:47 GMT
Google shares in slight recovery
Google's sign outside its Googleplex HQ
The market has been cooling towards Google
Shares in internet search giant Google have recovered slightly after Tuesday's 10% plunge in value.

The firm's share price inched slightly upwards on Wednesday to $364.80 (208.46), a rise of $2.18 or 0.6%.

Tuesday's fall came after Google's chief finance officer George Reyes said overall growth was slowing.

Google later issued a statement seeking to assure investors that the company still saw "significant opportunities" for revenue growth.

Mr Reyes told investors at a conference that the company would have to find new ways to increase revenues."We're going to have to find other ways to monetise the business," he said.

Nearly all Google advertising revenue comes from a pay-per-click ads system.

'Negative reaction'

"Growth is slowing and now largely organic," Mr Reyes was quoted as saying. Increasing the number of search queries Google performs would be one way to achieve such growth, he said.

Google is taking a shaky market down. It's the other shoe to drop
Larry Peruzzi, analyst

"The search monetisation gains have now been largely realised."

Tim Biggam, chief options strategist at Man Securities in Chicago, said that stock valuations based on future growth prospects were also likely to be hit when expectations were dampened.

"As in the case with Google... you are going to see this sort of negative reaction in the marketplace."

Google stock had been hit in January over fears that its shares were overvalued. Then, its 82% surge in profits failed to meet Wall Street's forecasts and questions were asked about its way forward.

At the time, it reported that net income in the last three months of 2005 rose to $372.2m (209m) from $204.10m a year earlier, lifted by a strong demand for online advertising.

"Google is taking a shaky market down. It's the other shoe to drop," said another analyst, Larry Peruzzi, senior equity trader at The Boston Company Asset Management.

"It's been a stellar performer and a leader," he added. "This is kind of new territory for them being this cautious."

The chain of events that led to the shares fall

Google shares fall on slow growth
28 Feb 06 |  Business
Google rapped over adult photos
23 Feb 06 |  Technology
Google's communications breakdown
01 Feb 06 |  Business
Google set to fall on profit miss
31 Jan 06 |  Business
Google data request fuels fears
20 Jan 06 |  Technology
The world according to Google
20 Jan 06 |  Business
Copyright for the digital age
17 Oct 05 |  Technology

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