Eric Schmidt
Google Beats Wall Street Estimates for Q4 2008, Despite Profit Drop
Google announced their earnings today as planned (though a bit early, but not as early as Microsoft) – and the news was good. They reported net revenue of $4.2 billion, while analysts’ estimates were at $4.12 billion.
Adjusted earnings (see below) translated to $5.10 a share, whereas the Street predicted $4.95.
However, the good news comes with a caveat. Net income saw a sharp decline, year-over-year. The fourth quarter of 2007 saw a net income of $1.2 billion while Q4 2008 saw “just” $382 million.
Aggregate paid clicks for Q4 were up 18% year-over-year and up 10% over the third quarter of 2008.
“Google performed well in the fourth quarter, despite an increasingly difficult economic environment. Search query growth was strong, revenues were up in most verticals, and we successfully contained costs,” said Eric Schmidt, CEO of Google. “It’s unclear how long the global downturn will last, but our focus remains on the long term, and we’ll continue to invest in Google’s core search and ads business as well as in strategic growth areas such as display, mobile, and enterprise.”
UPDATE (Kevin Newcomb): The huge dip in Google’s net income can be attributed to a $1.09 billion “impairment charge” Google took during the quarter, including charges of $726 million related to its investments in AOL, and $355 million related to its investments in Clearwire.
That basically means that Google is admitting it overpaid for those investments, and it’s using the turmoil in the broader economy to make up for that, without drawing too much fire from investors.
Without those charges, Google would have reported $1.62 billion in net income, or $5.10 per share, for Q4 2008, instead of the $382 million in net income and $1.21 earnings per share with the charges. That compares to $1.56 billion in Q3, and $1.20 billion in Q4 2007.
ClickZ News has more details in “Google’s Q4: Advertisers Keep Spending, Consumers Keep Clicking.”
Google, Microsoft Higher Ups Dish Out the Dough for Obama Inauguration
Execs from Google and Microsoft are ponying up big time for President-elect Barack Obama’s big day. On January 20, the former junior Senator from Illinois will become the 44th President of the United States.
Who from search is giving big for the shindig?
From Google:
- Eric Schmidt (CEO) $25,000.00
- Larry Page (Co-founder) $25,000.00
- Marissa Mayer (Vice President, Search Products & User Experience) $25,000.00
- Richard Costolo (former Feedburner CEO) $25,000.00
- Chad Hurley (YouTube co-founder) $25,000.00
- David Drummond (Senior Vice President, Corporate Development and Chief Legal Officer) $25,000.00
From Microsoft:
- Steven Ballmer (CEO) $50,000.00
- Bradford Smith (Senior Vice President, General Counsel, Corporate Secretary, Legal & Corporate Affairs) $25,000.00
- Craig Mundie (Chief Research and Strategy Officer) $25,000.00
- Steven VanRoekel (Senior Director, Windows Server Solutions Group, Microsoft) $50,000.00
So far from Yahoo, one lone donation, from an attorney:
- Laura Covington $10,000.00
For a full list of donors, click here.
via SFGate
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Vote Obama/Google in ‘08?
Google CEO Schmidt Will Not Be Obama’s CTO
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Obama is Winning the Internet War
Google CEO to Speak About the Future of Tech in DC Next Week
Eric Schmidt may have turned down the job of Obama’s CTO, but he’s still part of the President-elect’s transition team. And during this transition time, the Google CEO will give a speech about the future of technology and economic growth.
The speech will take place in DC, next Tuesday, November 18, 2008 from 1:00 – 2:30pm EST. The event is hosted by the New America Foundation and will occur at the Ronald Reagan Building Ampitheater at 1300 Pennsylvania Ave NW. Be sure to RSVP if you wish to attend.
Can’t attend? There will be a live webcast. Click on the RSVP link above to watch. You’ll need Flash 9.
Google CEO Schmidt Will Not Be Obama’s CTO
President-elect Barack Obama ran on a technology platform that included creating a new cabinet-level position of Chief Technology Officer (CTO). Many names have been thrown around as possibilities with the most prevalent of them all being Google CEO Eric Schmidt.
But Schmidt says that’s not going to happen. He’s happy at Google and he has no plans to go anywhere. He does intend to remain an advisor to Obama.
This is good news since Google likely needs Schmidt to stay put right now. Search advertisers, like many other companies, are bracing to see just how big of a hit they’ll take during the tough economy.
Related Reading:
Google CEO Calls Internet “Cesspool”
Google CEO Affirms Stance on Independent Yahoo
Google’s Schmidt Talks Yahoo, Newspapers, ‘Don’t Be Evil’, and iPhone
SEW Experts: Vote Obama/Google in ‘08?
Google CEO Eric Schmidt hit the campaign trail this week with presidential candidate Barack Obama. Is there any merit to Google’s statement that Mr. Schmidt’s personal beliefs are his own and Google isn’t backing Obama, just its CEO? In today’s Searching for Meaning column, “Vote Obama/Google in ‘08?,” Kevin Ryan asks if Schmidt crossed the line of appropriate behavior and good sense.
Move Over George Soros Google Wants To Play In the Forex Space
Seems legendary investor George Soros, who supposedly made a billion dollars trading on the foreign currency exchange, will have some competition from Google as they are now hedging against fluctuating currency exchange rates by investments in the forex market.
Cnet reports that Google has invested over $80 million dollars in forex trading hedges to offset the strengthening dollar against the global currencies many of their advertisers are paying them in.
Given that 51% of Google’s revenue comes from outside the United States, many large advertisers are given credit in their own currency which could be worth less at the time they actually pay Google.
The value of the US dollar against the euro, Canadian dollar and the British pound has increased substantially in recent weeks, thus Google gets less US dollars when someone pays them. The actual value of the clicks is done in US dollars at the base of the calculations, so Google advertisers get to pay less than what they would if there was just one currency used in the actual bidding.
Maybe the brothers Google want to emulate Soros who was part of the Google Author series that had CEO Eric Schmidt as part of the presentation.
His Wikipedia entry about his currency speculation profits may be alluring to the Google founders who have shown a penchant for aggressive investments into a number of markets.
“On Black Wednesday (September 16, 1992), Soros became immediately famous when he sold short more than $10 billion worth of pounds, profiting from the Bank of England’s reluctance to either raise its interest rates to levels comparable to those of other European Exchange Rate Mechanism countries or to float its currency.
Finally, the Bank of England was forced to withdraw the currency out of the European Exchange Rate Mechanism and to devalue the pound sterling, and Soros earned an estimated US$ 1.1 billion in the process. He was dubbed “the man who broke the Bank of England.”
Be careful guys, it is a highly volatile market and we wouldn’t want you to lose money.
Web Content is Having the Worst Week EVER!
I don’t know if everyone is in a bad mood over the economy or what, but web content is having the worst week ever.
First, Google CEO Eric Schmidt said the internet was a cesspool. Then, Kevin Kelleher at GigaOm said that certain social sites are ruining the whole social networking industry because their nicheiness has gone just a little too far in his not-so-humble opinion. Finally, David Cowan decided that the “internet sucks” meme was a good idea for a marketing campaign to push MashLogic, including the tagline “Take back the web.”
You may not want to join a social network dedicated to the admiration of David Hasselhoff, but that doesn’t mean social media is doomed.
You may enjoy half the videos on YouTube, but perhaps they weren’t all created for you.
In a modern day world of customization and the web making things more immediate, we’ve come to expect what we want when we want it.
But now that’s leading to self-important decisions about what should be on the internet in the first place.
The problem with declaring the web as full of junk is that such elitist thinking generally leads to a social form of censorship.
The world wide interwebs thrive off of openness and access for as many people as possible. But if we begin to reign it in because some CEOs, bloggers, and startups decide that what they think is good is the only thing that matters, then the web will truly become a garbage dump of narrow, upper crust excogitation.
Google CEO Calls Internet “Cesspool”
Google CEO Eric Schmidt must love controversy. In a speech to magazine executives Wednesday he called the internet “a cesspool”, AdAge reported.
I don’t know if that makes Google a sewerage company, but I think Schmidt should realize that many look at Google as their filter to the web. Employees like Matt Cutts spend all their time working on ‘purifying’ the results, to expect publishers to be the answer may not be the right approach.
Criticizing opponents to the Yahoo-Google ad deal may not be a smart move given the recent drop in value of the once “golden child” of the web. Schmidt challenged “if you are going to criticize us, criticize us properly.” Claiming ad prices would not increase under the Google Yahoo ad deal.
Schmidt displayed a certain amount of callous aloofness when he avoided questions about how publishers could improve their ranking with Google.
“”We don’t actually want you to be successful,” he said. The company’s algorithms are trying to find the most relevant search results, after all, not the sites that best game the system. “The fundamental way to increase your rank is to increase your relevance,” he added” AdAge reported.
If you call the web a cesspool but do not offer insights to quality content providers who pay money to provide professional journalism I don’t think you are serious about cleaning it up, so much as taunting an economically challenged industry.
Google Proceeding with Yahoo Deal in Early October
Google is proceeding with its deal to serve ads on Yahoo’s search results. CEO Eric Schmidt told Bloomberg TV that they were moving forward on the deal despite regulatory concerns.
“We are in the process of talking to the government. They’ve not indicated one way or the other how they’re dealing with us,” said Scmidt.
Do you think the Google-Yahoo deal will be stopped? Let us know in the comments.
via Reuters
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Now States are Investigating Yahoo-Google Deal
Google Earnings Top $5.37 Billion in Revenue Q2 2008
Google revenues topped $5.37 billion for the quarter ended June 30, 2008, an increase of 39 percent compared to the second quarter of 2007. That’s also an increase of 3 percent compared to the first quarter of 2008.
But those numbers still disappointed investors who basked in the glow of Google’s growth and perhaps lingered a little too long in the sun.
The big news? Weakness in key sectors such as real estate, where paid search has proven resilient in the face of the recession. As SEW readers know, Auto finance average CPC was down in June; as was the total Finance category.
Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs, or TAC. In the second quarter of 2008, TAC totaled $1.47 billion, or 28 percent of advertising revenues.
“Strong international growth as well as sustained traffic increases on Google’s web properties propelled us to another strong quarter, despite a more challenging economic environment,” said Eric Schmidt, CEO of Google, in a statement. “As we continue to focus on innovating in our core business of search, ads and apps, we also look forward to enhancing the experience of our users and expanding the reach of our advertisers and partners with new technologies and formats, particularly as our integration of DoubleClick gains momentum and creates new opportunities in display advertising and elsewhere.”
Highlights of the 2nd Quarter:
Google Sites Revenues – Google-owned sites generated revenues of $3.53 billion, or 66% of total revenues, in the second quarter of 2008. This represents a 42% increase over second quarter 2007 revenues of $2.49 billion and a 4% increase over first quarter 2008 revenues of $3.40 billion.
Google Network Revenues – Google’s partner sites generated revenues, through AdSense programs, of $1.66 billion, or 31% of total revenues, in the second quarter of 2008. This represents a 22% increase over network revenues of $1.35 billion generated in the second quarter of 2007 and a 2% decrease over first quarter 2008 revenues of $1.69 billion.
International Revenues – Revenues from outside of the United States totaled $2.80 billion, representing 52% of total revenues in the second quarter of 2008, compared to 48% in the second quarter of 2007 and 51% in the first quarter of 2008. Had foreign exchange rates remained constant from the first quarter of 2008 through the second quarter of 2008, our revenues in the second quarter of 2008 would have been $88 million lower. Had foreign exchange rates remained constant from the second quarter of 2007 through the second quarter of 2008, our revenues in the second quarter of 2008 would have been $249 million lower.
Revenues from the United Kingdom totaled $774 million, representing 14% of revenue in the second quarter of 2008, compared to 15% in the second quarter of 2007 and 15% in the first quarter of 2008.
Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 19% over the second quarter of 2007 and decreased approximately 1% over the first quarter of 2008.
The growth of paid clicks year-over-year is good news, showing the strength of the paid search marketplace. As Google has stated previously, the company has made an effort to improve the quality of clicks rather than increasing click volume. AdWords and AdSense were down sequentially, due to quality control and seasonality.
Google acknowledged the weakness of key sectors (Autos, Finance, Real Estate) that have wreaked havoc with display advertising. Real estate sector for paid search and contextual ads is down year-over-year. Auto ad spend is up year-over-year, but not consumer financing.
Ad Sense partners may have felt the squeeze too. Traffic Acquisition Costs (TAC), the portion of revenues shared with Google’s partners, decreased to $1.47 billion in the second quarter of 2008. This compares to TAC of $1.49 billion in the first quarter of 2008. TAC as a percentage of advertising revenues was 28% in the second quarter, compared to 29% in the first quarter of 2008.
The majority of TAC expense is related to amounts ultimately paid to Google’s AdSense partners, which totaled $1.32 billion in the second quarter of 2008. (TAC is also related to amounts ultimately paid to certain Google distribution partners and others who direct traffic to Google’s website, which totaled $154 million in the second quarter of 2008.)
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