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Google Doubles its Profits 203

Posted by CowboyNeal
from the selling-like-hotcakes dept.
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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Google Doubles its Profits

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  • Yawho? (Score:4, Funny)

    by Anonymous Coward on Friday July 21, 2006 @03:29AM (#15755116)
    Seriously guys, thanks for playing.
    • by ph1ll (587130) <ph1ll1phenry@yah o o .com> 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.

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

          by masklinn (823351) <slashdot.org @ m a s k l i nn.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.

    • 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 explaination about that either

      What can we learn from yahoo ?

      • Im not going to spend much time here 'exploring'
      • I'm not going to use, or buy webmail plus
      • If yahoo think i visit yahoo just for there webadverts (screen coverage is increasing) then think again
      • Yahoo is not a bad news and information site if you're surfing with an ad-blocker. Without one, its useless and horribly annoying. Their email is OK but certainly not better than gmail. Unless Yahoo really focuses on doing something well rather than trying to do everything poorly, I don't see what the future holds for them. Anyone can put up an ad-infested portal.
  • 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) Homepage
      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?
      • by Anonymous Coward on Friday July 21, 2006 @04:33AM (#15755264)
        You could buy a lot of chairs for $2.83 billion :)
      • Well, for Microsoft to make money is about as difficult as falling off a log - they get paid for virtually every PC sold by default. Add all the PCs sold in a quarter, and that's a lot of money - Microsoft basically have a license to print money.

        Google on the other hand actually have to compete to get paid.
        • Compete with whom? Nobody has a search engine that's nearly as popular as Google. And if you want to buy cheap pay-per-click ads, Google is your only serious option.

          Which is not to say that Google doesn't deserve its success. They didn't blunder into their main business, the way Microsoft did. Their search engine succeeded because it was designed to keep working as the Internet grew. And althought they sort of blundered into the ad business, they didn't make the kind of stupid mistakes MS made when it blu

      • Still, Google is rising fast. Will we someday see Google's net income overtake that of Microsoft, I wonder?
        Well, right now, Google's revenue is mainly driven by the growth of the Internet, since it comes mostly from those little ads. I suppose if the Internet grows by a factor of 4, then yeah, they'll have more income than MS. But it'd be better if they had more followthrough on their other ventures, so they weren't so dependent on one single business.
  • 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?
    • 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.
    • 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...
    • 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?
    • 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.
      • "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, Microsoft lose a lot of risk to their existing revenue streams.
      • MS is already in the ad business. It is the primary source of revenue for MSN and they have decided to push it more agressively.

        Ads aren't going anywhere. It is an industry unto itself. Saying google only has one revenue stream in ads is like saying Microsoft only has one revenue stream in software.
    • 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.
    • 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.

    • 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
    • Um...They also sell Enterprise [google.com] products. Given their brand-name recognition and expertise, selling this stuff shouldn't be too difficult.
    • 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?
    • I would think another source of revenue (that they certainly wouldn't talk about if true) would be trading on the buzz they can find out about before everyone else does (e.g. searches regarding mergers before they're public). Even though this would be trading on inside information morally, it probably wouldn't be legally, since Google isn't an insider.
    • " Does it bother anyone besides me that google has only one source of revenue? It's like a company that sells only one product..."

      1) no. it doesnt because no, thye dont. What about the new google payment system? What about the google-store.com that was mentioned already (not that i think that is a huge revenue turner)? That is not to mention all the free shit they give away that they could charge for. There's gold in them there hills.

      2) Even if it was, tons of companies only sell one product. As long as the
      • Another killer product will, I think be Gmail for you domain; Gmail is a wonderful product, and it's even better when used for your domain. When ready for deployment Google should offer GFYD it as a paid-for service. USD $100 per year wouldn't be such a high price for a small company to pay for that kind of mail service. Times that by a million companies and you're talking about grossing $100m a year for a product that has already been developed and the type of hosting that Google are so good at already.
  • 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).
  • 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.

    • It's just rarely used in the present tense.

      'Slashdotted' is a very common term and is used frequently. Same with 'dug', although 'dug of course was always a verb :P
    • 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.

      Very appropos. If Slashdot were a university, it would definitely be in California.

      Ba-DUM-bum-CCCCHHHHH!!!!
  • 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 NEXT Microsoft), Currently Google has the a revenue that's about 1/6 of Microsofts and a market value that's roughly half. Profit margin looks good as well even if it's 3/4 of Microsoft. On the other hand O think Google stands a better chance of continued
    • 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 $389.33. Then there's dividends - many people own shares in companies that have negligable growth for years, purely because the dividends return more money than they'd get as interest from a bank.
      • 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 sum capital. You can put money into almost any stock and get somewhere near 100% out if you look at it your way; but what people are interested in is the ± value that affects the 100%.
        • The comment is about growth and return on investment, not on sum capital.

          The comment should have been about growth and return on investment. The comment actually was:

          so at this rate it will take about 166 years to get your investment back

          which is a comment about sum capital. The correct statement would have been:

          It will take about 166 years to double your money.

          (Ignoring for the moment the fact that the number is wrong, as others have pointed out, and that it fails to account for the possibility of compound

      • 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.

    • 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.
      • 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 and are very profitable, but their shares simply are not worth half what they currently stand at. The problem with cash though is that it's not earning anything (much), and any investment you do make with it has to earn at least as much as your current bus
        • You forget the Market's expectation of continued profit growth. For example if they maintain 100% profit growth for 5 years, their yearly income per share will be (4*2.50 = 10.00)*2**5 = $320.00.

          In which case your current $385 share is looking like a fantastic investment.

          Of course it is very unlikely they will maintain 100% profit growth for 5 years straight but you get the idea.
    • 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?
      • Besides, how many stock traders do you know that got rich sitting on a basket of stocks and watching the dividends trickle in?

        Warren Buffett? But he's only the second richest person in the world.
      • Besides, how many stock traders do you know that got rich sitting on a basket of stocks and watching the dividends trickle in?

        Ah yes. But on the same note, how many traders do you know that got caught up in the heydays of the late 90s, and bought into some dot-com stars and ended up broke? There's something to be said for value investing [wikipedia.org]. Might not make you rich (though Buffet et. al did quite well with it) overnight, but IMO it's a much better long-term strategy.

  • 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 lot of slashdotters would be quite happy about, focusing on the financial aspects of certain tech companies and F/OSS finances) or don't report news at all.

    But please, none of this "Logo Toilet Paper to replace Charmin at the Googleplex" news. I find slash
    • Who do you think runs Slashdot, robots? No, its run by humans. All humans have favorites and biases and beloved underdogs. So I really don't think your request is going to go very far. Its focus is "News for Nerds, Stuff that Matters". Google is nerdy and matters. Anything they do is nerdy and matters.

      Understand?
    • I'm a Yahoo! shareholder, you insensitive clod!
  • 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.
    • by pedantic bore (740196) on Friday July 21, 2006 @05:13AM (#15755341)
      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.

      People said the same thing about Microsoft.

    • 3? Just of the top of myhead

      • Linux
      • BSD
      • Solaris
      • Z/OS
      • Whatever mac runs
      • Windows
      • A ton of other UNIX clones

      Outside this, there is a looong list of fringe OS, like HURD, plan9 and friends.

      If by "really" you mean "has to run on a standard PC for less than 1000", at least Linux, BSD, the max thingy, Solaris 10 and windows qualify.

      • We are talking reality here, not wishful thinking.

        The only players in the desktop market are Windows, Apple and Linux (in all its flavours, mostly Red Hat, SuSe and the latest fashion one,which last year was Gentoo, this year is Ubuntu). All the rest are fringe OSes on this area.

        And of course an hypotetical GoogleOS makes sens only in a desktop, so don;t drag all the server share other OSes have.
    • How about Google OS version 1.0.

      Lets not forget that Google is essentially an advertising company. I, for one, would not use an Adsense laden OS even if it was free.

    • Doesn't really seem like that many, considering the amount of cars of types of televisions there is out there.

      Bad analogy ... near as I can tell there are not that many kinds of cars either -- gasoline, diesel, hybrid, all-electric, synth-fuel. Sure, there are many models (hatchback, sports car, SUV, etc), but then there are many models of computers too (big iron servers, laptops, ultralights, desktops, workstations ...). Please, please, let's not go back to the days when every hardware vendor had their
  • by SFSouthpaw (797536) on Friday July 21, 2006 @04:39AM (#15755281) Homepage
    Yahoo's employees googling for better jobs.
  • 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 ...
  • by Antifuse (651387) <slashdotNO@SPAMryanwaddell.com> on Friday July 21, 2006 @05:03AM (#15755321) Homepage
    And how much of that profit is due to AdSense click fraud?
  • As much as I love to use Google [the search engine mostly] I am sick of this 'Beta' thing.

    Everything that comes out of any company is now branded as 'Beta' Software / websites. The new Microsoft Live [live.com] crap, Yahoo is branding their crap as Beta... I'm sick of it.

    Now, perhaps they could hire Tom Cruise to utilize his witchcraft [google.ca] to somehow get Beta as a trademark -- then they could lay on the royalty fee's on any company using it for commerical use -- I'm sure that would quadruple their profits! :-)

    By
  • Holding breath., (Score:2, Insightful)

    by rzekson (990139)
    I'm holding my breath waiting until Google, the holy virgin and the axis of all goodness, donates a fraction of their profit comparable to that contributed by the much hated Microsoft.
  • 'We can't have another Microsoft unless someone else is prepared to bend over and be the next IBM'

    Microsoft is scared of Google because unlike them, google built up it's current powerbase through being better then everyone else, not through rushing to, and maintaining, a manopoly.

    Of the two, Google's business model is the most stable.

    Microsoft missed out on search completelly. They dislike google for having the market share they should 'rightly' have. However, if Microsofts vision was so good, why did MSN f
  • I'm happy to hear that Google is making a large amount of profit. In fact, I hope they make even more profit.

    I can think of many things that Google has done:

    a search engine that outperforms all others.
    financial support for firefox
    google earth
    gmail (webmail that doesn't suck)
    picassa
    google maps
    google summer of code supporting my favorite OSS projects
    google calendar
    kicking Microsoft's .ss

    I am hoping google in the next year will come out with more products, support more OSS, and do even greater things. Oh and
  • Sometimes everybody wants to see the glass as half empty. Yahoo had a second quarter profit of $163 million. It was lowered than expected and lower than last year's $755 million for the same time period.
  • I've been a long-time fan (and a stock-holder) of the company. Their software-quality has slipped noticably during the years. Their web-pages contain horribly broken HTML at times, with the bug existing for many months until it finaly goes away and the same browser no longer has a problem.

    Their "message boards" (attached to each article) are some times either completely inaccessible, or have features missing — the "recommendations", for example, were broken for a couple of weeks recently. Someone mu

  • ... ah the hell with it.
  • I am not surprised. Every second page I access after a google search, is just a scraped result, full of google ads placed in a tricky confusing way.

    Stuffed so bad, you really have to figure it out if you are clicking on an ad or an other link.

    Actually most of the pages that come up are teh definition of "excessive advertising", and supposedly google policy forbids that for adsense and adwords clients.... but they do not seem to enforce it too much ...

    oh well, i am using a lot of yahoo, and sometimes even ms

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