Google: in search of performance Google, founded in 1998, is barely a teenager. But its shares look middle-aged: they have underperformed the Nasdaq index by a fifth this year. They trade at 12 times 2012 earnings, net of cash - a similar range to balding, chubby types such as IBM and Microsoft. This is despite expectations that Google will produce earnings per share growth of 17 per cent over the next three years, compared with 7 per cent at Microsoft and 11 per cent at IBM. There are various explanations for the doddering performance. It is hard for big technology companies that already dominate their markets to get valuations commensurate with their growth rates: Apple, after all, is just as cheap as Google and is expanding faster. This makes "buy Google on valuation" a hard short-term trade. But why should those with a longer-term view be discouraged? Google's last quarter was not great. Growth slowed and pricing slipped. But one quarter should not distract from the fact that Google has commanding market share (more than two-thirds, and growing, according to ComScore) in its core business, search advertising, which is itself growing fast. Some worry that when the Motorola Mobility acquisition is integrated, the handset maker will wreck Google's growth and margin profile. Perhaps, but Google is the rare company for which a $12bn acquisition counts as a reversible mistake. The patents can be kept and the rest spun or wound down. Finally, there is the worry that the familiar search box is on the way out as a way to explore the internet. Apple's Siri responds to voice commands, and surely some search tool with a "social networking" angle attached will come along, too. But one might wait for the anticipated disruption to show up in the search market figures or in Google's results before wheeling the company's shares into the old folks" home.