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Google shares dropped nearly 10 percent over the course of two days, wiping out more than $24 billion from the company's valuePlunge in share prices followed weak earnings report showing a 20 percent decline in profits compared to the same quarter last yearAnalysts say the drop in earnings is driven by a an advertising problem that will continue to worsen for Google
As Google suffers a catastrophic nose-dive in its market value, analysts are already predicting its demise as the world's lead Internet search engine.
'[Google] could disappear in five to eight years and disappear in the sense that Yahoo used to be the king of search,' said Eric Jackson, the founder and managing member of Ironfire Capital, a technology-focused hedge fund. 'Now, for all intents and purposes, Yahoo has disappeared,' he said on CNBC Friday.
Google's stock value plunged a hair-raising 10 percent this week -- wiping out more than $24 billion from the company's value -- after its third-quarter earnings report, which revealed a 20 percent drop in profits over last year, was accidentally released three hours earlier than planned on Thursday.
The profit losses were driven by a decline in advertising revenue, according to its earnings report. The amount that advertisers paid Google on a click-per-click basis fell 15 percent.
Advertising revenues are falling -- and will continue to fall -- for Internet companies because consumers are increasingly migrating to mobile applications and advertisers aren't willing to pay as much for a mobile ad.
'I keep saying Facebook isn't the only one that has a mobile issue -- Google does, too,' Colin Gillis, an analyst for Boston Consulting Group, told CNBC.com. 'If you are an investor in Facebook, mobile is priced into earnings. I don't think mobile in Google is priced in.'
Advertisers aren't willing to pay as much for mobile advertising because the platform is not as effective as advertising on a desktop or laptop computer, analysts said.
Other companies, such as Apple, will get ahead of Google in attracting advertisers to their mobile applications and Google's dominance will eventually start to shrink, Jackson predicted.
'I think that there is a big opportunity right now for someone to step forward and assert themselves for a new way of getting people information for doing search in a mobile world,' Jackson said. 'I don't think typing in a blue box is the ideal format for a mobile world. And I think the best opportunity out there to displace Google in this area is probably Apple's Siri.'
For now however, despite its drop in earnings, Google remains dominant in online advertising with a 74.5 percent share of the U.S. search ad market, according to data from eMarketer.
Shares in Apple, the only technology company larger than Google in market value, fell by around 2.8 per cent during trading on Friday.
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Tumble: After crashing on Thursday, the share price fell even further when markets opened on Friday
Facebook, which is another technology stock heavily dependent on advertising for its revenues, saw its shares fall by 0.5 per cent during trading.
The Dow Jones index of trading on Wall Street dipped more than 200 points.
Google blamed its printers for releasing the results by accident. Speculation was mounting on Friday night that Google could make a legal claim against R.R. Donnelley, the company it pays to put out its financial results.
Blunder: A press release was prematurely issued on Thursday with the line 'awaiting quote from Larry' in reference to Google co-founder Larry Page
It was quickly obvious that a mistake had been made - the second paragraph of the filing said 'PENDING LARRY QUOTE' instead of an actual quote from Google CEO Larry Page - but it was not clear why.
The company could have a negligence claim to recover any additional costs it incurred in responding to the incident, according to Reed Kathrein at U.S. law firm Hagens Berman.
But any shareholders looking to recoup lost investments would not have a legal case because there was ‘no fraudulent intent’ in the early release, he added.
Google's troubles were shared by the markets as a whole - the Nasdaq market of technology stocks fell by more than two per cent, while the Dow Jones index was down 1.5 per cent.
The contagion also spread to Europe, with Britain's FTSE 100 closing 0.3 per cent lower and the leading French and German markets both down nearly one per cent.
Google later said on its blog that Donnelley had filed a draft of the document without authorization.
Respected financier David Buik, who has studied the stock markets for 50 years and works for investment firm Cantor Index, said: 'Nothing has ever come remotely close to this.
'The bubble has burst. After Google's meteoric rise something like this was always bound to happen.'
Trading in Google stock was halted when its shares fell by nine per cent in just eight minutes following the release of its disappointing earnings report.
Analyst at GFT Markets Fawad Razaqzada, told Mail Online: 'The closing price was around $695 a share - the last time it was this low was as recently as September 13. So, assuming a shareholder had bought before this date they would still be in profit.
'But if they had bought in the last five weeks they would now be sitting on a loss. Google's shares also traded around these levels in November 2007, reaching a high of $747.24.’
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