Shares of Google Inc. and Yahoo Inc. fell Thursday after the online search companies were downgraded by RBC Capital Markets, which cited low volumes and prices for paid searches.
Yahoo shares fell $1.63, or 5.1 percent, to $30.49 in afternoon trading on the Nasdaq Stock Market.
Google shares fell $8.66, or 4.5 percent, to $185.29 on the Nasdaq.
In the fourth quarter of 2004, prices were much higher than expected for Google as traditional, online retailers spent heavily to attract shoppers.
"Even more surprising than the robust pricing environment in (the fourth quarter) is the pronounced weakness in pricing this far in the first quarter of 2005,'' said RBC Capital analyst Jordan Rohan.
Sponsored online searches is a relatively new phenomenon, and widespread adoption by marketers occurred only over the last couple of years. Consequently, the industry has yet to establish seasonal patterns, which makes it difficult for investors to gauge progress, according to Rohan.
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