ANALYST VIEW - Google search service blocked in China

NEW YORK Fri Jul 30, 2010 4:09am IST

A man walks past the Google China headquarters in Beijing January 13, 2010. REUTERS/Jason Lee/Files

A man walks past the Google China headquarters in Beijing January 13, 2010.

Credit: Reuters/Jason Lee/Files

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

It was not immediately clear why the services were blocked. Shares of Google fell 1.4 percent in after-hours trading to $478.00, while shares of Baidu Inc(BIDU.O), 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 I 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?"

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)

(For more news on Reuters India, click in.reuters.com)

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