The most important ring bell for all Google shareholders should be falling by 12% margin from almost constant before 33% to 29% of revenue. With increase in revenue of 58% Y/Y Google demonstrated falling growth rate of -25% Y/Y. Google network growth is falling even more faster by -38% Y/Y due to heating up competition. Net Income actually fall from 1billion to 0.9 billion comparing to the 1st q 2007. Total cost and Expenses are growing 116% faster then revenue growth rate Q/Q. Sales per head is down by -6%. With all this deteriorating fundamentals investors still were ready to pay last Thursday 548.59 which brings Google to valuation of P/S=12.9, P/E=47, P/FCF=74. Even if Google could justify P/FCF=40 with slowing growth and falling margin share price has to have a dive into 300.00 territory. The problem here could be that on the way down support of the company could be devastated by losses and Google could become victim of its own success. Licencing and other revenue is still around 1% of total revenue and falling in absolute figures. All risks of one trick pony related to Search business where competitors literally one click away remains. This results are second in line with deteriorating fundamentals after slowing growth and earnings trends in Q1 2007 discussed here. How long could management be allowed to run the company based not on fundamentals but on "competitive landscape" will depend on its shareholders. This analyses is based on Google own published report.