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...

Cramer Goes Ga-Ga Over Google

One of the biggest bulls of Google's stock (goog) Jim Cramer just did one of his famous rants on the recent run up in the stock price tonight on his show Madd Money. Now I have to admit that Jim gets it wrong some if not a lot of the time and I take his advice with a grain of salt, but he does make some very good points about Google's stock valuation.

First off, people can't seem to get their heads around a $600 dollar stock. The first thing you need to realize is that there are a lot of other stocks out there that have high price tags. For instance The Washington Post (wpo) at $800, or even Berkshire Hathaway (brk) which is valued at over $120,000 a share!

The only real reason that most stocks don't have such high prices is that they have all gone through stock splits. A stock split is when you take a stock that is $100 for example and you split it in 2. This leaves you with 2 stocks at $50 dollars. Google's management has said from the very beginning that they do not plan on split the stock anytime in the future so the price tag will just continue to go up if the earnings keep pace.

While I do realize that Google's stock price has been on a decent run, it is all up to next weeks earnings to see just how long this can last. If they beat the numbers the stock will continue it's mad pace to 700, if they miss or meat there will be a pull back which would be a good opportunity to place your bets. The only problem is if they beat you could miss out on the fun.

It is up to you though if you believe in the long term story of Google I would put in a little before earnings and a little after this way you can't get burned too bad by a surprise either way. I have been convinced of this story since the IPO and the Google long term story just seems to gets better every day...