Google falls short of expectations
Google falls short of expectations
By Chris Nuttall in San Francisco
Copyright The Financial Times Limited 2007
Published: July 19 2007 23:20 | Last updated: July 20 2007 02:10
Google failed to meet Wall Street’s growth expectations in its second quarter as its expenses increased and revenues from affiliates rose less than anticipated, sending its shares more than 7 per cent lower in after-hours trading.
Google does not provide earnings guidance and its profits of $3.56 per share fell short of the $3.59 predicted by the consensus of analysts gathered by Reuters Estimates. Gross revenues of $3.87bn, up 58 per cent year-on-year, were in line with Wall Street forecasts.
This was a rare miss for Google, which had exceeded analysts’ profits estimates for ten of its previous 11 quarters as a public company. Its shares fell 7.3 per cent to $508.52 on the news in after-hours trading in New York.
Stock-based compensation was $58m higher than the first quarter and overall operating ex-penses grew to $1.21bn or 31 per cent of revenues, up from $972m or 27 per cent in the first quarter.
Eric Schmidt, chief executive, said Google had taken on more new employees than it expected – it employed 13,800 people worldwide at June 30, an increase of more than 1,500 in the quarter.
Google reported “particular strength” in revenues from its core Google.com products, with 74 per cent growth year-on-year. In contrast, growth in its Adsense programme, where affiliate sites feature Google ads, was only 36 per cent.
George Reyes, chief financial officer, told an analyst conference call that the weaker growth was due to seasonality and “changes to Adsense implementation with certain partners that were less favourable to revenues”. He also blamed network changes and policy changes, where some terminations were made where partners were not meeting Google’s standards.
Google paid back $1.15bn to its partners as Traffic Acquisition Costs, amounting to 30 per cent of advertising revenues. Advertising revenues represent 99 per cent of Google’s sales.
Mr Schmidt said Google’s international business was “very very strong” – 48 per cent of Google’s revenues now come from outside the United States, up from 42 per cent a year ago.
It had $12.5bn on hand in cash and equivalents at the end of the quarter.
By Chris Nuttall in San Francisco
Copyright The Financial Times Limited 2007
Published: July 19 2007 23:20 | Last updated: July 20 2007 02:10
Google failed to meet Wall Street’s growth expectations in its second quarter as its expenses increased and revenues from affiliates rose less than anticipated, sending its shares more than 7 per cent lower in after-hours trading.
Google does not provide earnings guidance and its profits of $3.56 per share fell short of the $3.59 predicted by the consensus of analysts gathered by Reuters Estimates. Gross revenues of $3.87bn, up 58 per cent year-on-year, were in line with Wall Street forecasts.
This was a rare miss for Google, which had exceeded analysts’ profits estimates for ten of its previous 11 quarters as a public company. Its shares fell 7.3 per cent to $508.52 on the news in after-hours trading in New York.
Stock-based compensation was $58m higher than the first quarter and overall operating ex-penses grew to $1.21bn or 31 per cent of revenues, up from $972m or 27 per cent in the first quarter.
Eric Schmidt, chief executive, said Google had taken on more new employees than it expected – it employed 13,800 people worldwide at June 30, an increase of more than 1,500 in the quarter.
Google reported “particular strength” in revenues from its core Google.com products, with 74 per cent growth year-on-year. In contrast, growth in its Adsense programme, where affiliate sites feature Google ads, was only 36 per cent.
George Reyes, chief financial officer, told an analyst conference call that the weaker growth was due to seasonality and “changes to Adsense implementation with certain partners that were less favourable to revenues”. He also blamed network changes and policy changes, where some terminations were made where partners were not meeting Google’s standards.
Google paid back $1.15bn to its partners as Traffic Acquisition Costs, amounting to 30 per cent of advertising revenues. Advertising revenues represent 99 per cent of Google’s sales.
Mr Schmidt said Google’s international business was “very very strong” – 48 per cent of Google’s revenues now come from outside the United States, up from 42 per cent a year ago.
It had $12.5bn on hand in cash and equivalents at the end of the quarter.
posted by Carlos T Mock at 3:10 AM
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