July 29, 2010 / 10:41 PM / 7 years ago

Analysts' View: Google says search service blocked in China

NEW YORK (Reuters) - Google Inc said its Web search and mobile services in China were blocked on Thursday, weeks after Beijing agree to extend the company’s Chinese webpage license.

Google has been reporting sporadic disruptions on its mainland China services since January, when a dispute with Beijing over Web censorship blew up. The company reports the status of its China services on the page here

According to that page, service is defined as “fully blocked” when 67 percent to 100 percent of accessibility is disrupted. Some users on Twitter reported no problems accessing google.cn in Beijing on Thursday.

Shares of Google fell 1.4 percent in after-hours trading to $478.00, while shares of Baidu Inc, the biggest search provider in China, rose 3.5 percent to $82.00.

COMMENTARY:

DOUG ROBERTS, CHIEF INVESTMENT STRATEGIST, CHANNEL CAPITAL RESEARCH.COM IN SHREWSBURY, NEW JERSEY

”It seems with Google they’re still in negotiations. They may be blocking but the real question is, is this is an end game?

”We thought there was an end game before and but it turned out that there was a lot going on behind the scenes. Although Google wanted to make a statement, they didn’t want to lose their most important market. The question is, is this something major or an opening move in a game of chess?

”I think it’s part of a larger picture in terms U.S.-China relations, which is what you’re seeing on a broader scale with people making noise about China’s trade policies.

“There’s a lot going on with China so you have to really look at broad moves and not overreact to short-term things.”

ALAN LANCZ, PRESIDENT, ALAN B. LANCZ & ASSOCIATES INC IN TOLEDO, OHIO

”There’s no way to construe that as a positive. It seems like they were surprised with it and that it’s going to be hard to get back in that market and that’s a critical market for them. That’s pretty much why the stock has underperformed so much this year.

“The rest of Google is doing well, but this is the one stumbling block and unfortunately it’s a big segment from the standpoint of investors just because of the future growth potential for China.”

CHIP HANLON, PRESIDENT, DELTA GLOBAL ADVISORS INC IN HUNTINGTON BEACH, CALIFORNIA

”It’s an interesting play that would seem to carry as much risk to China as it does to Google. Investors have known for some time this is an issue, so they’ve been able to price this into the stock as a possible outcome.

”For China, this is a step beyond where they’ve been and I would think they’d want to be careful. They’ve been the darlings of capital flows for years, and if they’re going to do something like this, it could change that.

“It almost seems like they may be testing to see if that’s true. It’s a chicken and egg debate right now: does the world need China more or does China need the world?”

SANDEEP AGGARWAL, ANALYST, CARIS & COMPANY

”The last two or three months, what we are seeing is nothing but posturing. It’s posturing by Google and it’s posturing by the local regulators there.

”The one thing they (Chinese regulators) want to do is any company that’s operating there is to follow the local rules.

“Google is a truly global company and if you’re a global company you cannot not operate in the world’s largest Internet population.”

MARIANNE WOLK, ANALYST, SUSQUEHANNA FINANCIAL GROUP

”This is not just a single day event, there’s been intermittent blockages throughout many of Google’s services over the past week or so.

“I‘m quite surprised by the negative reaction of the market as this was fully anticipated and has no impact on our published forecast for the company, which has for some time assumed that revenue from China would be quite small since the company stopped censoring in that region.”

TRIP CHOWDHRY, ANALYST, GLOBAL EQUITIES RESEARCH

Chowdhry said China generates only $250 million to $300 million for Google, and that the company should not submit to Chinese requirements over its search product.

”I don’t think China is important to Google.

“If it comes that’s fine, but I don’t think Google needs to do business on terms that ‘dummify’ their products.”

Reporting by Alex Dobuzinskis and Leah Schnurr, compiled by Tiffany Wu

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