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Post by kasso on Apr 20, 2008 9:25:48 GMT -5
What's Google's Value?
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Bozur
Amicus
Posts: 5,515
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Post by Bozur on Apr 20, 2008 10:55:10 GMT -5
April 18, 2008, 4:42 pm How Big Is Google? Here’s Another MeasureBy Saul Hansell Google Rory Cellan-Jones, a blogger for the BBC, calculates an interesting statistic from Google’s earnings release yesterday. Google earned $803 million, about £407 million, in the United Kingdom in the first quarter. If you assume that rate won’t grow, that makes £1.6 billion for the year. And since Google’s British earnings are up 40 percent from a year ago, it is a safe bet it will grow. That means Google will overtake the ITV television network as the biggest seller of advertising in Britain this year, Mr. Cellan-Jones figures. ITV sold about £1.5 billion of advertising last year. Britain’s biggest commercial television business — the original “license to print money” — is about to be overtaken by an American upstart which only arrived in the UK in 2001. That should be no surprise. As best as I can tell, Google sells more advertising than any company in the world. This year Morgan Stanley estimates Google’s total advertising revenue will be $21.9 billion. Excluding the payments it makes to companies that display its ads, Google’s total ad revenue will be $15.7 billion. Time Warner, the largest media company in the world, earned $8.8 billion in advertising revenue last year. Viacom had $4.7 billion in ad revenue last year. I’m still working through the numbers at the other big conglomerates, but it seems clear that none of them sold more than $16 billion in advertising. Google, as it made clear yesterday, is hardly slowing down. It stated a goal of becoming the largest seller of Internet display ads in the world (overtaking Yahoo). More significantly, it is devoting enormous effort to building a system for television ads that will rival its text ad system. For now, it is focusing on its YouTube unit. But it plans to extend these to other forms of video, delivered both over the Internet and by digital cable and satellite systems. If Google succeeds — and that is hardly guaranteed — it could easily double in size or more, and thus dwarf any player in advertising.We don’t know what effect this will have. Google will argue that it is making the world of marketing more efficient and thus better for everyone. Many in the media business are not so sure that this efficiency helps them. But it is a good bet that the licenses to print money that have been relied on by companies like ITV around the world are increasingly being transferred to Mountain View. bits.blogs.nytimes.com/
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Bozur
Amicus
Posts: 5,515
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Post by Bozur on Apr 20, 2008 11:00:47 GMT -5
Google Defies the Economy and Shows Profit SurgeBy MIGUEL HELFT Published: April 18, 2008 SAN FRANCISCO — The American economy may be weakening, but Google said once again that the slowdown has not affected its business.Easing concerns that its growth would stall, the Internet search giant on Thursday reported better-than-expected financial results for the first three months of the year, igniting a huge rally in its shares. “We are obviously very pleased with another strong quarter for Google,” Eric E. Schmidt, Google’s chief executive, said during a conference call with Wall Street analysts. “It is clear to us that we are well positioned for 2008 and beyond, regardless of the business environment that we find ourselves surrounded by."Mr. Schmidt credited improvements to the company’s highly targeted advertising business for the growth, which was stronger overseas than domestically. For the first time, international sales accounted for the majority of revenue. The results came as a relief to investors, who were bracing for a big slowdown in Google’s business. The company issued its report after the close of markets, and its shares surged more than $76.42, or 17 percent, in after-hours trading, to end the day at $525.96. They had closed down $5.49, to $449.54, in regular trading. Still, Google’s performance is not likely to ease anxiety among investors about the overall health of the online advertising business. The company relies almost exclusively on short text ads that appear next to search results and on other Web sites. Analysts say that because those ads are more targeted and are used by marketers to drive traffic to their sites, they are more impervious to a slowdown than banners and other graphical ads, which are intended to increase brand awareness. Yahoo, the leader in the sale of display ads, reports financial results on Tuesday. Some analysts noted that Google’s growth did slow from the previous quarter and said the results did not completely dispel concerns about the health of Google’s business in the United States. “The international piece was solid,” said Ross Sandler, an analyst with RBC Capital Markets. “That is where most of the upside came from. Despite the comments that they are seeing no impact from the economy whatsoever, I think the growth rate in the U.S. deserves more attention.”Mr. Sandler noted that Google’s business in the United States had grown little from the last quarter of 2007 through the first quarter of 2008.Google, based in Mountain View, Calif., said net income grew 30 percent, to $1.31 billion, or $4.12 a share, compared with $1 billion, or $3.18 a share, in the first quarter of 2007. Revenue climbed 42 percent, to $5.19 billion, from $3.66 billion a year earlier. Excluding commissions paid to advertising partners, a widely followed measure, Google’s revenue was $3.7 billion, slightly higher than analysts expected. Its profit, excluding the cost of stock options, was $4.84 a share, handily beating forecasts. On average, Wall Street analysts were expecting Google to report revenue, excluding commissions to advertising partners, of $3.61 billion and income, excluding the cost of stock options, of $4.52 a share. Analysts and investors have obsessed in recent weeks over Google’s paid clicks, or the number of times users clicked on its ads. The concerns were heightened by various reports from comScore, the Web audience measuring firm, indicating that paid clicks declined sharply. The numbers are important because Google typically charges advertisers only when someone clicks on their ads. Google said paid clicks in the first quarter were up 20 percent from a year ago. That was lower than the 30 percent growth rate in paid clicks in the fourth quarter, but better than many investors had predicted. Overall revenue growth was also down from last quarter’s rate of 51 percent. During the call with analysts, Google executives said that the decline in growth of paid clicks was partly self-inflicted, as the company took several initiatives to improve the quality and relevancy of ads and to reduce accidental clicks. Mr. Schmidt said that as a result, Google was showing fewer ads, but those ads were more useful to users and to advertisers, leading to higher prices per click. “The domestic numbers are showing a material slowdown,” said Youssef H. Squali, an analyst with Jefferies & Company. “It is clearly a result of Google doing housecleaning, but we don’t know how much of the slowdown is due to the housecleaning.” During the call, Mr. Schmidt was asked about the possibility that Yahoo would outsource its search advertising business to Google, as part of Yahoo’s effort to fend off Microsoft’s takeover offer. Last week, the two companies announced a limited test in which Google would place ads on about 3 percent of Yahoo’s search results in the United States. “It is nice to be working with Yahoo, and we like them very much,” he said, declining to comment further.Google said that DoubleClick, which it acquired in mid-March, had little impact on the company’s finances this quarter. Executives said they were working on integrating the two companies’ products. They said the integration would help growth in Google’s nascent display advertising business. www.nytimes.com/
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Bozur
Amicus
Posts: 5,515
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Post by Bozur on Apr 20, 2008 11:05:46 GMT -5
Google's (GOOG) Black Box Wins, AgainPosted at 05:58 PM (4/18/2008) Almost no one knows what an algorithm is. The management at Google (NASDAQ:GOOG) doesn't care. The company's shares are up almost 20% after hours. Those who doubted the firm's ability to improve its business had been selling the stock off since the beginning of the year. All of the evidence from the first quarter, based on studies from internet measurement firms like comScore and large buyers of Google keyword inventory, said the growth the big search engine's ad units was slowing, perhaps to a rate as poor as 5% year-over-year.To some extent, analysts were right. In the US, the rate of ad growth slowed to 20%. It had been 30% in the fourth quarter of last year.Google's profits rocketed 30%. Revenue moved up 46% to $3.7 billion. The company reported net income of $1.31 billion, or $4.12 a share, compared with $1 billion, or $3.18 a share, a year earlier. The EPS figure was well above analyst estimates. What happened to Wall St. is that it was fooled into thinking that Google's growth had nearly stopped. More important, investors did not understand that the firm had built a better black box, again. The advantage Google has had for five years now over competitors like Yahoo! (NASDAQ: YHOO) is that the basic "math" that finds accurate search results is better than any other company's. The math for matching those search results with advertisers is even better. The process which Google employs to get these superior results is kept in a vault, perhaps Fort Knox. It is probably the most valuable intellectual property in the world. Wall St. may have assumed that the engineers at Google had stopped working on the system. But, that would not be giving the unusually successful company or its management their due.Google probably has hundreds of people working, constantly, on improving its algorithms to drive more and more accurate results. Microsoft (NASDAQ: MSFT) and Yahoo! have teams equally eager to turn their science into magic, but they are, at best, a year or more behind the leader. Wall St. was suckered. Google is still finding better solutions to the problems of search, at a geometric pace. Douglas A. McIntyre www.247wallst.com/
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