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Google Doubles its Profits

Posted by CowboyNeal on Fri Jul 21, 2006 03:25 AM
from the selling-like-hotcakes dept.
Google Businesses The Almighty Buck
WinEveryGame writes "Google just announced a very strong quarter. The internet search engine said it had net income of $721m, or $2.33 per diluted share, up from $343m a year earlier. Wall Street had expected earnings of $1.94 per share. Earlier this week Yahoo had announced lower than expected earnings."
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  • Yawho? (Score:4, Funny)

    by Anonymous Coward on Friday July 21 2006, @03:29AM (#15755116)
    Seriously guys, thanks for playing.

    • The value of engineers (Score:5, Insightful)

      by ph1ll (587130) <ph1ll1phenry@[ ]oo.com ['yah' in gap]> on Friday July 21 2006, @03:42AM (#15755145)
      <irony>Google? Are they still around? I thought The Economist had predicted their demise ages ago</irony>

      Seriously, it's nice to see a company that values its engineers doing so well.

      [ Parent ]

      • Is it? (Score:4, Insightful)

        by WindBourne (631190) on Friday July 21 2006, @03:57AM (#15755185) Journal
        Is it the value of the engineers?
        or is the value of a natural monopoly in a truely open market as opposed to a tied monopoly in closed market such as the MS's?
        Do not get me wrong. Google's engineering is what got them to this size. After all, Alta Vista, Yahoo and MS held 95% of the market when Google started. It is Googles superior ideas that enabled them to beat these other companies.
        [ Parent ]

        • Re:Is it? (Score:5, Informative)

          by masklinn (823351) <slashdot@org.masklinn@net> on Friday July 21 2006, @04:08AM (#15755214)

          Reading comprehension 101: Google's engineers are valuable != Google values its engineers.

          GP used the later, you understood the former, they have fairly different meanings.

          [ Parent ]

          • Re:Is it? (Score:3, Insightful)

            by WindBourne (631190)
            I switched in the early days for a number of reasons:
            1. The search is the most applicabale that that I seen. Yahoo was better when they were young , but did not scale.
            2. AV, Yahoo, and MSN had the entire first page as paid ads (even though it looked like they

    • I had a yahoo webmail account, the new webmail beta needs new windows or mac, since i have neither webmail beta is a no go. Explain to me why webmail needs windows or mac binaries - spyware ?

      Geocities trashed my webspace too after a couple of years no ex

  • chairs.... (Score:4, Funny)

    by linRicky (961271) on Friday July 21 2006, @03:44AM (#15755153)
    I sure would be modded down for this.. but just can't help wondering how many chairs are being thrown at Microsoft after this announcement....

    • I wonder... (Score:5, Interesting)

      by kripkenstein (913150) on Friday July 21 2006, @03:57AM (#15755186)
      Google had a net income of $721 million, according to TFA. Microsoft's net income last quarter was $2.83 billion in their last report [microsoft.com].

      So, Microsoft still have a far greater net income than Google. Still, Google is rising fast. Will we someday see Google's net income overtake that of Microsoft, I wonder?
      [ Parent ]

      • Re:I wonder... (Score:4, Funny)

        by Anonymous Coward on Friday July 21 2006, @04:33AM (#15755264)
        You could buy a lot of chairs for $2.83 billion :)
        [ Parent ]

        • Re:I wonder... (Score:3, Insightful)

          by Elemenope (905108)
          Not to be a Microsoft-Bash party pooper, but MS has made a few things that 'work', and even work well (as you mentioned, BASIC). The two that come most immediately to mind in the present world are MS Word and MS Excel. I personally use Open Office, not b

  • Google's Bad Business Model (Score:5, Insightful)

    by Umbral Blot (737704) on Friday July 21 2006, @03:51AM (#15755168) Homepage
    And all this money comes from adwords? Does it bother anyone besides me that google has only one source of revenue? It's like a company that sells only one product ... if demand for their product decreases the company dies. For example consider this possible situation: Microsoft bundles an adblocker with IE, automatically turned on, that blocks, among other things, google's adwords. Even if google sues MS could keep it in court long enough for google to go under. Scary isn't it?

    • Re:Google's Bad Business Model (Score:5, Funny)

      by Umbral Blot (737704) on Friday July 21 2006, @04:01AM (#15755195) Homepage
      Oops, I forgot: Microsoft isn't evil anymore [slashdot.org]. I guess the folks at Google can sleep safely.
      [ Parent ]

    • Re:Google's Bad Business Model (Score:5, Funny)

      by bluebox_rob (948307) on Friday July 21 2006, @04:09AM (#15755217)
      And all this money comes from adwords?
      Are you kidding? Have you even been to the Google Store [google-store.com]?! They do t-shirts, mugs - heck they even sell Lava Lamps! I'd like to see the adblocker that can block those babies...
      [ Parent ]
    • Not really.
      At this time, MS is blocked by the feds and europe from doing what you suggest.
      Second, they are in the process of diversifing right now.
      • Because MS never ever does anything illegally. I mean they're currenly ignoring the legal sanctions in Europe and simply paying the fines, at least last time I read a story about it. Isn't it worth a few million in fines to MS to kill google?

    • Re:Google's Bad Business Model (Score:4, Interesting)

      by killjoe (766577) on Friday July 21 2006, @04:22AM (#15755244)
      Ms would never do that because they are about to go into the ad business themselves. I suppose they could block all ads except theirs but I think that would end them up in court in a jiffy.

      They have been floundering a lot lately, it's a mystery to me why they are so keen on getting into the search and advertising business at all. Who knows what makes Ms tick anymore. As far I can see they gone insane.
      [ Parent ]
      • "Ms would never do that because they are about to go into the ad business themselves."

        Pro: f**king kill off Google
        Con: lose potential future ad revenue

        Tough choice?

        Even if you look at it rationally, it makes sense to do this. With Google dead, M

    • 721 Million dollars? (Score:4, Insightful)

      by Chuck Chunder (21021) on Friday July 21 2006, @04:28AM (#15755254) Homepage Journal
      I wish I could come up with that kind of "bad business model"

      Seriously though your "possible situation" is 100% laughable. If MS released such a browser it would take a long time to seriously penetrate the market and there would be strong resistance not just from Google. If the browser won't show ads then 99% of sites out there would refuse to serve it content.

      Google will certainly face challenges but to suggest that adwords revenue will simply disappear is absurd.
      [ Parent ]
    • Currently, Adwords is the MAJOR source of revenue (they sell a few search appliances, but that's pennies compared to Adwords), but Google Checkout will hopefully be a decent income source, especially once Google Base [google.com] becomes more popular.

    • it's all about infrastructure (Score:5, Interesting)

      by adam (1231) * on Friday July 21 2006, @04:39AM (#15755279)
      look at Amazon-- from what I understand (ianastockbroker) their actual inventory itself may not even turn a profit at all, but third party sales and their e-commerce licensing (to Toys-R-Us, Target, etc) makes them more than profitable. this is possible because they have the infrastructure built. when it comes down to it, people like to click on ads and buy stuff. not you, not me, but a percentage of people do. enough to make the ad game profitable, as seen by advertising in other fields (tv, billboards, hell even spam.. someone is clicking on all those links to buy v1agr4 or you and I wouldn't get so much spam).

      google is in the process of widely diversifying, and even if microsoft DID roll out a universal adblocker that was installed by default, I can envision several scenarios that google adwords infrastructure would still be useful for. how about when google unveils their free natiowide wifi metropolitan internet access.. of course it's free in exchange for using Gbrowser with AdViewing enabled.

      I use gmaps [google.com] on my BlackBerry8700 all the time.. google's success is all about creating functional/useful utilities (email, mapping, search engine, blogger, gcheckout, whatever) and then stuffing ads in there. The fundamental question is not whether MS can block them, it's whether ads can be profitable, and I believe the answer is yes.

      ..as an aside, the interesting thing [for me] to ponder, is whether google will ever adapt their business model to gain profit directly from user subscriptions for various services, or whether it will always remain ad-revenue driven
      [ Parent ]

    • Re:Google's Bad Business Model (Score:4, Insightful)

      by khendron (225184) on Friday July 21 2006, @06:26AM (#15755473) Homepage
      Isn't this like say TV networks and radio stations have a bad business model, because all they sell are commercials?
      [ Parent ]
      • That is why before that were the words: "imagine this possible situation". Were you reading every other sentance?
        • Indeed I missed the hypothetical setup, but you're talking about a situation that would never happen. Any browser that shipped with an ad blocker (other than pop-ups or malware stopping) would immediately get pummeled into the ground. One could argue tha
          • Why would it get "pummeled into the ground"? Legally? They're MS! And users would love it (magically there are no more banner ads, yay!) I know I certainly am attached to the adblocker plug-in for firefox, I wouldn't surf without it. I hear Opera has
            • There's a big difference between something that requires user intervention to get going, and something which blocks all ads when you install the main browser.
            • Remember when they tried to introduce smart tags? They only aimed to gain MS revenue, not directly stop content providers from getting it. Content providers simply wouldn't stand for it. If MS releases a browser like that then a lot of websites will choose

  • A lot of this (Score:5, Interesting)

    by thealsir (927362) on Friday July 21 2006, @03:51AM (#15755169) Homepage
    was due to one-time gains, such as the sale of stock in BAIDU.com. That's why the stock was down in after hours. This nonsense of beating estimates by a huge amount is a giant Wall Street smokescreen. Non-recurring things factored out, Google barely beat estimates. Growth is slowing, the CEO himself said that. I imagine more money is going to be pumped out of this in the future (admittedly YHOO had a negative effect on GOOG and BIDU).

  • Google is a verb now (Score:5, Funny)

    by William Robinson (875390) on Friday July 21 2006, @03:53AM (#15755176)
    Offtopic -1

    Does somebody else find it funny, how the web sites have become verbs. Look at the button 'Google Slashdot'. Imagine 'Slashdot Google' or 'Slashdot University of California' buttons to kill the web sites.

  • Value for money (Score:3, Interesting)

    by simon_hibbs2 (792812) on Friday July 21 2006, @03:54AM (#15755178)
    $2.33 earnings per share, at a cost of $387 per share. That's a return of 0.6% per year on your investment so at this rate it will take about 166 years to get your investment back in earned value.

    Yep, these Internet stocks sure are amazing value for money.

    Simon hibbs

    • Yes because I'm sure this will be the only growth Google sees in the next 166 years.

      • Re:Value for money (Score:2, Interesting)

        by KokorHekkus (986906)
        Yes because I'm sure this will be the only growth Google sees in the next 166 years.

        Totally agree with you there that Google will continue to grow.

        Acutally I don't see no reason why Google shoulde become as big as Microsoft (no, just as big, not the

    • Re:Value for money (Score:2, Insightful)

      by Threni (635302)
      > $2.33 earnings per share, at a cost of $387 per share. That's a return of 0.6% per year on your
      > investment so at this rate it will take about 166 years to get your investment back in earned
      > value.

      Er..you own the share too, so you'd have $389.3
      • Er... you own the share anyway, so that $387 was yours in the first place. If you put it into a bank savings scheme, you'd get a few % a year... and, whoah! The $387 that you put in originally!

        The comment is about growth and return on investment, not on s
      • But if the net profit is 0.6%, there's no way the dividend is going to be more than 0.6%.

      • Re:Value for money (Score:5, Informative)

        by vidarh (309115) <vidar@hokstad.com> on Friday July 21 2006, @05:11AM (#15755334) Homepage Journal
        As someone else has commented, the share is yours to start with so you can't count the price you aquired the share for as part of the earned value.

        The earnings does magically not get added to the share price, so you still have only $387, UNLESS the share price increases OR the company pays the full earnings out as dividends (in which case you'd have to subtract tax on it anyway, so your net return would be even lower than 0.6%, the same would apply if the share price increase and you sell).

        Most tech companies, though, never pay dividends (and if they do, it will certainly never be more than portion of their earnings - and so in this case 0.6% is the upper limit) - people speculate in continued share price growth.

        So if you hold the share the maximum return is equal to the earnings per share. In Google's case this is far below what you'd get at far lower risk elsewhere (case in point: I get around 5% on my UK savings account and short term bonds)

        Of course, if you sell the share you may or may not make money from fluctuations in the share price which may make it a worthwhile investment.

        Grossly simplified, people look at the earnings per share because it is one of many measures of whether the share is cheap or expensive. A high earnings per share (in percent of share price) means there is a higher likelihood of continued share price growth (but note that many other factors will also play in). A low earnings per share in percent of share price means that continued share price growt is unlikely unless the market believes that earnings will continue to grow rapidly to catch up with the share price increases.

        [ Parent ]

    • Re:Value for money (Score:5, Informative)

      by Anonymous Coward on Friday July 21 2006, @04:27AM (#15755253)
      That's $2.33 a quarter, buddy. Google's P/E is around 60, which is triple the typical blue chip, but typical blue chip companies are not growing at 70% annualized growth rates. And that's just the trailing P/E. Their forward-looking P/E is 30. Blue chip companies like Coca Cola and General Electric are trading at P/Es of around 20. And Google's profit margins, at around 25%, continue to astound.

      Google is quickly becoming a cash cow. They have $9 billion in cash right now. Microsoft has around $30 billion. That is a truly incredible comparison, given Google's relative youth.

      It's an expensive stock, but hardly as mis-priced as you seem to think.
      [ Parent ]

      • Re:Value for money (Score:2, Interesting)

        by simon_hibbs2 (792812)
        Fair enough, and thanks for the correction.

        Their share price still seems horribly overblown. Yes I know they're aprofitable business, as I said in an earlier reply, none of this is realy a probelm for them as an operating company. They have plenty of cash

    • Re:Value for money (Score:4, Interesting)

      by ClassMyAss (976281) on Friday July 21 2006, @04:58AM (#15755307) Homepage
      ...at this rate it will take about 166 years to get your investment back in earned value.
      Only if you assume that Google sends back 100% of their earnings to the shareholders - as I recall, it's generally a bad sign if a company is paying out everything it takes in, and the ideal situation is more like 50%. I don't know what Google does, but in any case, I get your point.

      However, pricing on tech stocks (in particular) has always been more about capitalizing on fear, greed, and hype as they pump up and drag down the stock price than about any sort of reasonable analysis. Everyone knows that everyone else is irrational (and everyone knows that everyone knows, etc.), so it's quite difficult to assign any sort of "value" to normal stocks, let alone public sweethearts like Google. You're just irrationally speculating on other people's irrationality in the hopes that it's the most rational move to make. You'll probably recall that before the IPO a lot of people were screaming that $100/share was way too high for a company with so little potential for further growth. It appears they were wrong, clearly. Is $400 too high now? Who knows...all I know is I don't have the money to be playing these kinds of games with it!

      Besides, how many stock traders do you know that got rich sitting on a basket of stocks and watching the dividends trickle in?
      [ Parent ]

  • My google adwords (Score:5, Interesting)

    by Anonymous Coward on Friday July 21 2006, @04:09AM (#15755220)
    I pay google around 14000$ per month for adwords. I pay yahoo about $500. In both places, I try to buy as much advertising as I possibly can. Yahoo simply doesnt deliver the clicks, and in fact the clicks coming from Yahoo have been FALLING if anything. Pathetic.

  • Another thing (Score:2, Insightful)

    by thealsir (927362)
    Why is news about google stock on the site? Since search was down, I didn't get to see if slashdot posted news about Yahoo's stock dropping 22% in a day, the largest single drop ever, on Wed. Either make a customized finance.slashdot.org (which I'm sure a

  • Google Operating System (Score:4, Interesting)

    by ActiveMatx (990128) on Friday July 21 2006, @04:37AM (#15755275)
    Since we are talking about the future of Google... How about Google OS version 1.0. Now I am sure that would be something awesome. With the amount of revenue they have, it's not that far-fetched to think they aren't capable of creating their very own OS. Besides, with the amount of computers we have out here in the world, there really are only 3 operating systems to choose from. Doesn't really seem like that many, considering the amount of cars of types of televisions there is out there.

  • The extra money probably came from (Score:4, Funny)

    by SFSouthpaw (797536) on Friday July 21 2006, @04:39AM (#15755281) Homepage
    Yahoo's employees googling for better jobs.

  • Will Goolge eclipse Microsoft? (Score:3, Interesting)

    by CurtMonash (986884) on Friday July 21 2006, @04:59AM (#15755311) Homepage
    Richard Brandt argues with passion that Google will eclipse Microsoft. [blogs.com] The idea is that all the reasons why Microsoft beat everybody else don't apply to Google. I disagree, however, because I don't see Google's advantage as having much sustainability. [monashreport.com]

    On the other hand, I was fairly late to realizing how sustainable Microsoft's advantage would prove, back in my stock analyst days, so do consider the source ...

  • Clickity click, Google wins! (Score:3, Interesting)

    by Antifuse (651387) <slashdot@ r y a n w a d d e l l.com> on Friday July 21 2006, @05:03AM (#15755321) Homepage
    And how much of that profit is due to AdSense click fraud?
    • I have to admit I never understood what the fuss over the Google Accelerator was. Wasn't it just a proxy server? There are loads of proxy servers already, and I don't see people complaining about those...

      Even so Google managed to deflect the anger after a
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