But the enormous valuation of Google is based � to the extent it has any rational basis � on predictions that it will continue to grow very rapidly, extending its success in Internet advertising to other Internet services and other forms of advertising. Signs of even a modest slowing in that expansion, relative to investors' expectations, could have a large impact on Google's share price.
Google's aura of infallibility, moreover, has been clouded on other fronts in recent weeks. The debut of its video download store met with critical reviews. And its decision to introduce a Chinese service that filters out content objectionable to the Chinese government raised questions about its commitment to its informal slogan, "Don't be evil."
Google has been insistent about doing things its own way, and yesterday's surprise may be a consequence of its unusual policy of not providing guidance to investors about its anticipated financial results. Its shortfall was largely the sum of several modest drags to its results � developments that many other companies might have warned of in advance.