I welcome our google overlords:
Google's Net Nearly Doubles
As Ad Sales Continue to Sizzle
By KEVIN J. DELANEY
October 19, 2006 5:53 p.m.
Google Inc. said third-quarter profit rose 92% and revenue soared 70%, as international operations and the Internet company's own sites boosted its online advertising sales.
Google's stock climbed 7% in after-hours trading, after the company's results showed little sign of the slowing growth in online advertising sales that has afflicted rival Yahoo Inc. lately. Yahoo Tuesday reported a 38% decline in third-quarter net income and lowered its full-year financial forecasts.
[Eric Schmidt]
Google, based in Mountain View, Calif., this year has forged a number of deals to extend the reach of its online ad system to other places on the Web. It announced a $1.65 billion agreement1 to buy video site YouTube Inc., and ad-brokering pacts with others including Dell Inc., News Corp. and Intuit Inc.
Google places the ads -- usually targeted based on keywords such as "Chicago car rental" -- on partner sites and keeps a commission. Some investors view Google's expanding its reach on the Web in this way as a key driver of its future growth.
But ad revenue from Google's own sites, such as its flagship Web search engine, generated 60% of its third-quarter revenue, rising 84% to $1.6 billion from a year earlier compared to a 54% increase in revenue from partner publishers. Google's international sales contributed 44% of its third-quarter revenue, rising from 39% a year earlier. The company has long had a very strong market share in Web search in many markets outside the U.S., and in recent years has pushed to boost overseas revenue through new offices and sales staffs.
"We had an excellent quarter in all respects, especially including international," said Chief Executive Eric Schmidt, in a conference call with analysts.
Google posted net income of $733.4 million, or $2.36 a share, up from $381.2 million, or $1.32 a share, a year earlier. Excluding factors such as stock-based compensation, Google said profit was $2.62 a share, well above the $2.42 a share that Wall Street analysts polled by Thomson First Call forecast on the same basis.
"The numbers were significantly higher than expected and demonstrate that Google continues to outperform the market," said Marianne Wolk, an analyst at Susquehanna Financial Group, whose firm makes a market in Google shares. While Google traditionally has been strong in the United Kingdom, "you're starting to see momentum throughout the rest of Europe and we think there's also starting to be some traction in Asia, which has not been their stronghold," added Ms. Wolk.
Revenue rose to $2.69 billion from $1.58 billion. Excluding commissions paid to marketing partners, revenue was $1.87 billion, up from $1.05 billion in the year-earlier period.
Google reported results after the close of regular stock-market trading. At 4 p.m. in Nasdaq Stock Market composite trading, the stock was at $426.06, up $6.75. Shares jumped to $459.74 in after-hours trading.
Investors have been on guard for any signs of slowing growth at Google as it matures, and the company's sales grew slightly more slowly than in previous quarters, though still at a fast clip. The 70% growth in revenue during the third-quarter from a year earlier compared to 79% and 77% in the first and second quarters and 96% in the third quarter of 2005. Google said its spending on capital expenses, such as computer and networking equipment and facilities, would continue to increase at a substantially faster pace than its revenue this year.
Separately, the three music companies that have licensed their content to YouTube received small equity stakes in the company as part of the negotiations. People familiar with the talks said Warner Music Group Corp. Vivendi SA's Universal Music Group and Sony Corp. and Bertelsmann AG's Sony BMG received the equity in lieu, effectively, of cash advances against future revenue. These people characterized the stakes as warrants that would convert to cash when Google's acquisition of YouTube closes.
The equity stakes were reported Thursday by the New York Times, which estimated their collective value at $50 million -- or 3% of YouTube's value in the Google deal. One person familiar with the talks suggested that figure might be too high.
Google's Net Nearly Doubles
As Ad Sales Continue to Sizzle
By KEVIN J. DELANEY
October 19, 2006 5:53 p.m.
Google Inc. said third-quarter profit rose 92% and revenue soared 70%, as international operations and the Internet company's own sites boosted its online advertising sales.
Google's stock climbed 7% in after-hours trading, after the company's results showed little sign of the slowing growth in online advertising sales that has afflicted rival Yahoo Inc. lately. Yahoo Tuesday reported a 38% decline in third-quarter net income and lowered its full-year financial forecasts.
[Eric Schmidt]
Google, based in Mountain View, Calif., this year has forged a number of deals to extend the reach of its online ad system to other places on the Web. It announced a $1.65 billion agreement1 to buy video site YouTube Inc., and ad-brokering pacts with others including Dell Inc., News Corp. and Intuit Inc.
Google places the ads -- usually targeted based on keywords such as "Chicago car rental" -- on partner sites and keeps a commission. Some investors view Google's expanding its reach on the Web in this way as a key driver of its future growth.
But ad revenue from Google's own sites, such as its flagship Web search engine, generated 60% of its third-quarter revenue, rising 84% to $1.6 billion from a year earlier compared to a 54% increase in revenue from partner publishers. Google's international sales contributed 44% of its third-quarter revenue, rising from 39% a year earlier. The company has long had a very strong market share in Web search in many markets outside the U.S., and in recent years has pushed to boost overseas revenue through new offices and sales staffs.
"We had an excellent quarter in all respects, especially including international," said Chief Executive Eric Schmidt, in a conference call with analysts.
Google posted net income of $733.4 million, or $2.36 a share, up from $381.2 million, or $1.32 a share, a year earlier. Excluding factors such as stock-based compensation, Google said profit was $2.62 a share, well above the $2.42 a share that Wall Street analysts polled by Thomson First Call forecast on the same basis.
"The numbers were significantly higher than expected and demonstrate that Google continues to outperform the market," said Marianne Wolk, an analyst at Susquehanna Financial Group, whose firm makes a market in Google shares. While Google traditionally has been strong in the United Kingdom, "you're starting to see momentum throughout the rest of Europe and we think there's also starting to be some traction in Asia, which has not been their stronghold," added Ms. Wolk.
Revenue rose to $2.69 billion from $1.58 billion. Excluding commissions paid to marketing partners, revenue was $1.87 billion, up from $1.05 billion in the year-earlier period.
Google reported results after the close of regular stock-market trading. At 4 p.m. in Nasdaq Stock Market composite trading, the stock was at $426.06, up $6.75. Shares jumped to $459.74 in after-hours trading.
Investors have been on guard for any signs of slowing growth at Google as it matures, and the company's sales grew slightly more slowly than in previous quarters, though still at a fast clip. The 70% growth in revenue during the third-quarter from a year earlier compared to 79% and 77% in the first and second quarters and 96% in the third quarter of 2005. Google said its spending on capital expenses, such as computer and networking equipment and facilities, would continue to increase at a substantially faster pace than its revenue this year.
Separately, the three music companies that have licensed their content to YouTube received small equity stakes in the company as part of the negotiations. People familiar with the talks said Warner Music Group Corp. Vivendi SA's Universal Music Group and Sony Corp. and Bertelsmann AG's Sony BMG received the equity in lieu, effectively, of cash advances against future revenue. These people characterized the stakes as warrants that would convert to cash when Google's acquisition of YouTube closes.
The equity stakes were reported Thursday by the New York Times, which estimated their collective value at $50 million -- or 3% of YouTube's value in the Google deal. One person familiar with the talks suggested that figure might be too high.
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