Shares Of Google Drop Below $500 Following Disappointing Earnings Forecast

July 18, 2008 (FinancialWire) Google (NASDAQ: GOOG) (Current Market Cap: US$167.55 Bil.) reported a weaker-than-expected 35% rise in net profit, and shares of the company tumbled 8% to below $500.

The disappointing profit came as Google said second-quarter online ad revenue held up well across sectors and world regions despite a weaker global economy that has tripped up rivals. Officials pointed to problems managing its cash -- now totaling $12.7 billion -- in the face of volatile interest rates, the cash drain of recent acquisitions and higher costs to hedge foreign currency risk as operations expand overseas.

Google shares fell as much as 10% from a Nasdaq close of $533.44, but recovered to $492 after Chief Executive Eric Schmidt reassured investors on a conference call about the company's search traffic. Second-quarter net income rose to $1.25 billion, or $3.92 per diluted share, from the year-earlier quarter's $925 million, or $2.93 per diluted share.

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