Google Reports Solid 2nd Quarter Earnings Again

Wall Street yawn as Google reported stellar earnings as usual. Here are some highlights from the release...

Q2 Financial Summary

Google reported revenues of $5.52 billion for the quarter ended June 30, 2009, an increase of 3% compared to the second quarter of 2008. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the second quarter of 2009, TAC totaled $1.45 billion, or 27% of advertising revenues.

Google reports operating income, operating margin, net income, and earnings per share (EPS) on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures in the accompanying financial tables.

• GAAP operating income for the second quarter of 2009 was $1.87 billion, or 34% of revenues. This compares to GAAP operating income of $1.58 billion, or 29% of revenues, in the second quarter of 2008. Non-GAAP operating income in the second quarter of 2009 was $2.17 billion, or 39% of revenues. This compares to non-GAAP operating income of $1.85 billion, or 34% of revenues, in the second quarter of 2008.
• GAAP net income for the second quarter of 2009 was $1.48 billion as compared to $1.25 billion in the second quarter of 2008. Non-GAAP net income in the second quarter of 2009 was $1.71 billion, compared to $1.47 billion in the second quarter of 2008.
• GAAP EPS for the second quarter of 2009 was $4.66 on 319 million diluted shares outstanding, compared to $3.92 for the second quarter of 2008 on 318 million diluted shares outstanding. Non-GAAP EPS in the second quarter of 2009 was $5.36, compared to $4.63 in the second quarter of 2008.
• Non-GAAP operating income and non-GAAP operating margin exclude the expenses related to stock-based compensation (SBC). Non-GAAP net income and non-GAAP EPS exclude the expenses related to SBC and the related tax benefits. In the second quarter of 2009, the charge related to SBC was $293 million as compared to $273 million in the second quarter of 2008. The tax benefit related to SBC was $69 million in the second quarter of 2009 and $48 million in the second quarter of 2008. Reconciliations of non-GAAP measures to GAAP operating income, operating margin, net income, and EPS are included at the end of this release.

As of June 30, 2009, cash, cash equivalents, and short-term marketable securities were $19.3 billion.

Google also increases it ever growing stock pile of Cash, as of June 30, 2009, cash, cash equivalents, and short-term marketable securities were $19.3 billion. Impressive, but then again I was sold on Google a long, long, time ago. Let's see how the aftermarket treats it...

Google Keeps On Trucking As The Rest Of The World Burns

The recession proof Google proved that well... it's recession proof! Even with the major downturn in essentially all the economies around the world Google managed to beat analysis estimates and actually grow year over year and quarter over quarter. They manged to make GAAP operating income for the fourth quarter of 2008 of $1.86 billion! That is nothing to sneeze at when a lot of other companies are reporting losses. They also have 15.85 billion in cash, cash equivalents, and short-term marketable securities as of December 31, 2008. Not too bad either... Here are the other highlights from the quarter...

• Revenue growth of 18% Y/Y and 3% Q/Q
– Google properties revenue growth of 22% Y/Y and 4% Q/Q
– Network revenues increased 4% Y/Y and 1% Q/Q
– International revenue was $2.9 billion
• Operational Highlights
– Traffic and revenue solid in Q4 despite difficult economic environment
– Key investments continue in our core search and ads businesses
– Increasing prioritization of our newer investments:

And my personal favorite the visual evidence of Google's growth...I don't have to tell you what to do... the numbers speak for themselves...

Google Is A Screaming Long Term Buy

As I watched Google fall over 5% today I couldn't help but think there was some force pulling it down. I mean with the market up so much you would think that beaten down GOOG would shine, but just the opposite. Now in after hours Google announces a major partnership with NBC Universal to run TV ads. This stock has come down from $747 hard to find itself at nearly $420. With just a 27 P/E ratio this stock has literally never been this cheap! It really boggles the brain to even think about it. They have almost 13 billion in cash and are still raking in the money. Sure they are not smashing the park out of the numbers from last year, but you have to consider the law of large numbers and the fact that Google is throwing money in a lot of different places. They have the money to burn and they are taking advantage of that so they can reap the benefits in the years to come. I don't know about you, but I am going to be buying some Google, these price levels are just an unbelievable entry point.

Google Misses By 9 Cents... Big Deal

Today Google reported numbers that most companies would kill for. Revenues grew 39% year over year, but this still wasn't enough to keep the bears at bay. Analysts were looking for Earnings Per Share of $4.72 Google came in at $4.63. Revenues for Google's 2nd Quarter 2008 came in at 5.37 Billion, analysts were looking for 5.4 Billion. Of course, the knee jerk reaction to this created a sell off in after hours where Google (goog) fell about 7%.

Giving Google's already decent P/E ratio this earnings report has created a fabulous buying opportunity. There P/E ratio is currently 37, but after today's earnings report it will be closer to 32 based on a price of $490 per share! To put that into perspective Yahoo is trading at a 30 P/E ratio and Apple is trading at a 35 P/E ratio. Not to mention Google is sitting on 12.7 Billion in cash! That number alone is more than a lot of companies are even worth and Google can afford to just watch it collect interest.

Do your children a favor and go out and buy some Google stock while it is on sale. That is unless you think that Google, the Internet, Advertising and Youtube are just going to disappear. Just check out these slides below from the 2nd Quarter Earnings Report...

Yahoo Seals The Deal With Google

It is final, Google (goog) has official one the search engine race. Some people might think they had already won it, but with the announcement from Yahoo today that it will begin running even more Google ads with it search results, it's over. This will certainly be good for Google's stock price, which has lost a bit of steam after even it's last earnings jump. Obviously, the test that Yahoo was running with Google went well and this should be a win-win for both companies. They have also decided to link up their instant messages services, in another sign that they plan on becoming even tighter in the future. Sorry Microsoft! Here is the press release...

Google (Nasdaq: GOOG) today announced that it has reached an agreement that gives Yahoo! the ability to use Google's search and contextual advertising technology through its AdSense™ for Search and AdSense for Content advertising programs. Under the agreement, Yahoo! has the option to display Google ads alongside its own natural search results in the U.S. and Canada. In addition, Yahoo! can serve contextually targeted ads on its U.S. and Canadian web properties as well as on its current publisher partner sites. Yahoo will continue to operate its own search engine, web properties and advertising services.

In addition, Yahoo! and Google agreed to enable interoperability between their respective instant messaging services bringing easier and broader communication to users.

"This commercial agreement provides Yahoo! with the opportunity to deliver more relevant ads to users and provide advertisers and publishers with better advertising technology to help them succeed in their own businesses," said Eric Schmidt, Chairman and CEO of Google. "This agreement will preserve the competitive and dynamic online advertising space."

As a result of the agreement, Yahoo! will be able to complement its own advertising program with Google’s advertising technology. As a result, advertisers will be able to better reach consumers, and Yahoo! and its current publisher partners can generate more revenue. Yahoo can use Google's advertising technology on as many or as few of its search results and content pages as it chooses.

This non-exclusive agreement allows Yahoo! to enter into similar agreements with other advertising providers. In addition, Yahoo! will maintain relationships with its own advertising customers and will continue to rely exclusively on its own advertising program outside of the U.S. and Canada. The agreement has a term of up to ten years: a 4-year initial term and two 3-year renewals at Yahoo!’s option. Financial terms between the two companies were not disclosed.

Although Google and Yahoo are not required to receive regulatory approval of the arrangement before implementing it, the companies have voluntarily agreed to delay implementation for up to three and a half months to give the U.S. Department of Justice time to review the arrangement.

Take a look back at all our Google posts here!

Google Blows Out The Numbers!

Nervous Google investors got a big reassurance as Google (goog) reported 1st quarter earnings per share today 4-17-08 of $4.84 per share. The analysts were looking for $4.52 per share. Gross revenue rose 42 percent to $5.19 billion, analysts were looking for $5.13 billion.

With the ridiculous news coming out of comscore a few weeks back, the stock was punished for inaccurate comscore's paid click data. If you were paying attention you would know that Google had already told us that they were reducing bad clicks, and that there click data could suffer, but that it would generate higher revenue per paid click. Obviously, they were correct and comscore now has zero credibility! Here is a couple highlights from the quarter...

• Revenue growth of 42% Y/Y and 7% Q/Q
– Google properties revenue growth of 49% Y/Y and 9% Q/Q
– Network revenues increased 25% Y/Y and 3% Q/Q
– Growth in international markets continued to be strong, with $2.7 billion in Q1 international revenue

• Operational Highlights
– Improvements in search quality remain key focus
– Continued ads quality initiatives to show users better, more relevant ads
– Increasing value for advertisers and publishers with broader and deeper solutions

• Acquisition of DoubleClick gives Google the leading display ad platform
– Strong Apps traction and addition of functionality to Google Apps suite of products

Take a look a these slides from their earnings report and let me know if you notice a pattern...

Google's Quarterly Revenue Growth Graph

Google's US Vs. International Revenue Growth

In summary, I have been behind Google since very near the beginning and their growth has still only just begun the way I see it. If you have been waiting on the sidelines to jump in now is the time. Google's stock has been beaten down with the rest of the market unfairly, and they have silenced all the critics with this beat. The shorts are running to cover as Google is up over $80 in after hours!

Internet advertising and mobile advertising are the waves of the future because of their unique ability to target. This makes a for great return on investment for advertisers which is exactly what they are all looking for. The advertising market is estimated at 1 trillion dollars and Google is only going to capture more of that quarter after quarter, year after year. One of the best long term investments out there.

Think about this, many analysts had lowered their first-quarter estimates by 12 cents a share on average. So, 1st quarter 2008 earnings still beat by those lofty analyst's targets by 0.20 cents! Those same analysts that have price targets as high as $900... Google still beat them. This story is far from over...

For more reasons to own Google check out these posts...

Yahoo Tests Outsourcing Search To Google

The Google Checkout Effect

Google Misses By A Penny, Does It Matter In The Long Term?

Stock Outlook 2008

The Real Winner Of Cyber Monday Is...

Or you can view all of them on one page here!

The Google Checkout Effect

With the drop in Google's stock price over the past few months the question of how much Google Checkout could help the results next quarter comes to mind. After all, Google was literally giving it away for free for the past year, and it was one hell of a expensive promotion from the sounds of it!

Google stated that as of December 2007 they had signed up over 100,000 merchants and millions of users. Starting at the beginning of February Google began charging 2% + $0.20 per transaction. Just think of all that revenue that will now be added, instead of subtracted from Google's bottom line. These figures of course will continue to grow as more and more merchants see the benefits of signing up for Google Checkout.

Just listen to these statistics, Google says web shoppers who’ve signed up for Checkout are 10 percent more likely to click on an ad that features a Checkout button and 40 percent more likely to make an online purchase once they reach a site. In other words, if an online retailer uses Checkout and spends ad dollars on Google (GOOG), it improves the chance that shoppers will make purchases on it's site. These kind of stats are what will not only help retain Google's advertisers, but gain even more. Plus, have we already forgotten about the Yahoo disaster and how it will effect Google Checkout?


Is that enough reason to be bullish on Google? That is up to you to decide, but I think that Google is a global growth story that has really just gotten started. As the demand for instant information across the world drives their growth we will begin to see the true potential of one of the best long term stock picks out there.

One of the benefits of being a long term investor is the ability to focus on the future, especially in markets like these. If I wouldn't have been in certain stocks before this whole subprime meltdown started I wouldn't be able to identify these stocks as potential buys at these levels. Just because the entire market drags everything down doesn't necessarily mean these stock deserved to go down. Are companies like Google done growing their businesses, or is this just a readjustment of risk...

Want more Google? Check out this post...

Google Misses By A Penny, Does It Matter In The Long Term?

Well if you are a long term investor no, but the short term could be a little rough as people digest the numbers. First of all, let me just say that most companies would kill for these kind of numbers, but Google is not most companies.

Google (goog) reported revenues of $4.83 billion for the quarter ended December 31, 2007, representing a 51% increase over fourth quarter 2006 revenues of $3.21 billion and a 14% increase over third quarter 2007 revenues of $4.23 billion. Analysts were looking for $4.44 earnings per share and Google came in at $4.43, compared to $3.91 in the third quarter of 2007.

One very important number to look at is aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 30% over the fourth quarter of 2006 and approximately 9% over the third quarter of 2007. This shows you that the core business of Google is still remarkable strong.

Google does not issue guidance so it is not too surprising that the analysts weren't right on. At any rate this stock has already been hammered the past month, and is continuing to get hammered in afterhours. It is trading at a major discount to just a month ago and after this earnings report it looks like it is going to create a great entry point. I know that I will be taking this opportunity to build to my position. Google is a global story, and as the world becomes more connected through the Internet Google will only continue this amazing growth...

For more information about Google stock check out this post.

The Real Winner Of Cyber Monday Is...

With all the talk of retailers having to cut prices and in turn suffer though lower profit margins, shouldn't we be focusing on the bigger picture here? The mighty Google is the one directing a ton of traffic to all these different sites this holiday season. Not only that, but a smarter consumer that is looking for bargains is going to be more inclined to click on an ad or two while looking for the perfect price on a product. The more people that search for all these high tech gadgets and anything else they are looking for on the net the better...

More traffic = More Searches = More Money For Google

But wait there's more, in case you missed it Yahoo's server's weren't working for part of the day. Customer's couldn't even complete transactions through Yahoo on this all important Cyber Monday! Imagine all of those retailers that are going to come running over to Google Checkout... what better reason to switch then to have Yahoo let you down on one of the biggest days of the year! So guess where all those potential customer's went? That right, straight over to a site that allowed Google Checkout. With the Google Checkout promotion ending at year end this will certainly be a great future revenue stream for the big Goog.

So while I am continuing to be behind the Google Train, you had better think about waiting until after the next fed meetings coming up to be on the safe side, or just put on some now and some after the meeting. While I do believe the fed will cut, if they don't you will be able to get in at a lower price... Either way this is one of the best Long-Term holdings out there.

Google Beat's The Street Again

Nothing new here, Google (goog) blows past analysts estimates posting $3.91 earnings per share (eps) vs the estimated $3.78 that analysts were predicting. They also beat on revenues with 3.01 billion which is 70 million above what the analyst were looking for. Mind you this beat was already after many analysts had raised their estimates prior to the release, so the bar was already very high, and Google still had no problem beating!

The only blemish on the quarter was continued hiring by the company that spooked investors a bit in after hours trading. If you listened to the conference call though, they explained that some of that was due to the acquisition of Postini and some due to an overhang of people that were hired in the second quarter that didn't start till the third quarter. The management said that they would keep a watchful eye on hiring in the future as well.

Overall, this looks like another great quarter from the company that never seems to stop growing it's impressive bottom line. They have introduce serveral new ad formats for adsense and have just begun to start making money off of Youtube with the new overlay ads. Also, with the release of the I-Phone, mobile Internet use has only begun to hit and Google just released adsense for mobile which will pad the bottom line a bit next quarter! Basically, with the seasonally strong forth quarter coming up it is hard to find another stock out there with this much potential.

You might be thinking I can afford to buy a $600 stock, but don't forget that you don't have to buy a full share of a company like this and others with such a high price tag. You can buy partial shares though places like sharebuilder and other brokerages. Don't think you missed the boat either, because as grows the Internet grows Google. This is a worldwide play on the growth of the Internet and the push from traditional adverting into Internet advertising which is much easier to track through services like Google Analytics. Plus, with the Summer Olympics coming up in China and the presidential election next year things are only going to get better for this company.

For more information on how I see the Google Story check out these past posts...

Cramer Goes Ga Ga Over Google
Google Should I Stay Or Should I Go?
Putting A Value On A Stock
Evolution Of Traditional Advertising

Google Train And The Forming Tech Alliance

Tearing Down The Microsoft Monopoly