Google Announced Q4 Earnings Getting Back to

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Google Announced Q4 Earnings; Getting Back To...

By: Andy Beal
2009-01-23

... its Fighting Weight. Google has released its Q4 numbers"beating Wall Street expectations"and in the process has admitted that it can...

... no longer continue to milk its fat search engine cow.

First, the boring stuff numbers:

• Google reported revenues of $5.70 billion in Q4, representing an 18% increase over Q4 2007 revenues of $4.83 billion and a 3% increase over Q3 2008 revenues of $5.54 billion.
•Googles net income fell sharply to $382 million, or $1.21 a share, from $1.2 billion, or $3.79 a share, in the same period a year earlier.
• It it werent for writing down the value of its AOL and Clearwire investments by $726M and $355M respectively, Google would have seen net income of $1.62 billion"or 15 cents higher than the $4.95 per share expected by analysts.

So, considering the recession, the above numbers overall paint a positive picture. Except that Google CEO Eric Schmidt has warned that the company might face tougher hurdles in Q1 of this year:

In some ways, the fourth quarter was the easy part, Schmidt said. Then, the economy was in uncharted territory. Now its clear were in recession. We dont know how long this period will last. Were certainly prepared to get through this (with) no problem.

Now for the good stuff. Im not going to do too much segment analysis, but I do want to point out one key observation. Google finally has a reason to be competitive and improve its products"and its not Yahoo or Microsoft, but the U.S. recession!

I dont know about you, but for the last couple of years its felt as though Google is more interested in spreading itself wide (and thin)"in an effort to be more than a one-trick pony"than innovate in search. With no credible threat from any other challenger, we were left using a search engine that, apart from some cosmetic changes, didnt really feel like it had changed much since around 2000.

As the recession crept up on us, Google reacted by announcing new innovations in search, a focus on its core products, and shuttering anything that was a distraction. To draw an analogy from the boxing world, Google is getting back to its fighting weight!

So, in the end, Googles attempts to be more than a one-trick pony were somewhat futile. Just as I can make a living from internet marketing, but would starve if I tried to monetize my photography skills, so too Google is realizing that sometimes its OK to only have one trick"just make sure that its the best damn trick around!
PS. OK, I lied a little about doing segment analysis. Heres what struck me from the numbers:

* The amount of money that Google makes from its own sites increased by 22% from a year ago.
* 30% of its revenues came from AdSense, but this segment only grew by 4% in the past year.
* Revenue from paid clicks increased by 18% from a year ago and 10% from last quarter.
* The amount Google spends in Traffic Acquisition Costs (AdSense payments) decreased by 1%.
* If Im reading it right, Google plans to allow employees to exchange any stock options currently under-water, with those that have a exercise price closer to todays stock value. Which would help with employee retention.

(Analysis compiled from here, here, and here.)

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View All Articles by Andy Beal

About the Author:
Andy Beal is an internet marketing consultant and considered one of the world's most respected and interactive search engine marketing experts. Andy has worked with many Fortune 1000 companies such as Motorola, CitiFinancial, Lowes, Alaska Air, DeWALT, NBC and Experian.

You can read his internet marketing blog at Marketing Pilgrim and reach him at andy.beal@gmail.com.


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