Stifel downgrades Google on Facebook threat

Stifel Nicolaus downgraded Google Inc to “hold” from “buy” on worries that growth in the Internet search giant’s core business may be slowing due to the onslaught of mobile and social media websites like Facebook. With more than 30 percent of Internet minutes spent on Facebook the Internet’s centre of gravity is shifting from Google to Facebook, analyst Jordan Rohan said in a note to clients. “Search just isn’t the bright shiny object that it was when Google became a public company in 2004,” he wrote.

Threatned by the social media bug

As social and mobile media emerges, there is reduced advertiser enthusiasm to spend more on Google, Rohan added. “Large acquisitions like Motorola Mobility may become more frequent and could distract Google’s senior management team,” the analyst wrote. In August Google said it would buy Motorola Mobility Holdings for $12.5 billion – its biggest deal ever – and sparked investor concerns that the deal would take Google deeper into the competitive hardware business and threaten its popular Android operating system. Stifel cut its estimates for Google’s fourth quarter, 2012 and 2013 results citing slowing core search growth due to maturation of desktop search and macroeconomic softening. Mountain View, California-based Google is expected to report third-quarter results on Oct. 13. Google shares were down nearly one percent at $498.0 in premarket trade. They closed at $501.90 on Tuesday on Nasdaq.

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Reuters