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Google's mini-correction

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Last Friday the market got spooked and dumped a couple of percentage points, erasing all of its 2006 gains. With the oil jitters on one side and unsavory earnings from a few bellwethers, it wasn't hard to see why. Among the ruins was Google's stock dropping about 10%, going below $400; a decisive correction.

Some attributed Google's misfortune on Friday to its hard stance against the government's request to peek into its records regarding usage patterns by its users. Google's refusal to share this data should be lauded. While there is strong possibility that they might eventually be forced to release this data to the government, if even on a limited basis, they must be commended for showing a backbone and standing by the rights of their faithful users.

I would have to believe that there were other factors behind the thrashing on Friday, chiefly among them, the balloonish share price it was commanding. A few weeks ago I had blogged about Google's irrational exuberance, and how its stratospheric growth was unsustainable. The fact is that many investors already had itchy trigger fingers and were only waiting for an excuse to run for the doors. No, Google isn't headed for dire straits, and it's doubtful that its share price would fall much further, even though it is still quite inflated. But at least this correction was a show of sanity by the market.

Some analysts were advising clients to pick up Google shares on dips such as this. I would however need a much bigger dip before I get onboard. Sorry, but a $120 billion market cap is still a little too rich for me.

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