Google
The third quarter results have been overwhelming the media, since last week, again news headlines seem to have a positive spin to them, at least concerning Google.
Google stunned even the analyst with its third quarter results, catapulting its share prices up, to nearly 4% on the same day, meaning a 120% rise from the bottom of late last year. Google’s net income rose by 27% to $1.64 billion, so much so that Google’s CEO Eric Schmidt announced that "While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us"
From the headlines one could deduct that the recession seems to be over, but then we are faced with news as the one from the Bank of America, were the red figures have spiralled into the billion figures. It sometimes feels as if the newspapers believe or want to believe that the world is still green behind their ears. Sudden unexpected bad news only leads uncertain investors to take impulsive decisions and sell their shares, causing massif bumps in the slow road to recovery. People need to be informed, only then shall they be able to make reasonable and thought through decisions. So why only focus on spreading the so called positive news, instead of researching and letting the world know what is happening and why.
So is the Google news for real, what are the causes for their unexpected profit? And is this sustainable or as in the case of Alcoa only the repercussions of lay offs and sever cost cutting, that shall not be in the companies best interest in the future.
What were the causes for Google’s rise in income? As any company in the recession, they have been holding down cost thanks to their new CFO, however they have not given up their expansion plans, and even during the recession took over a few small business. It is needless to say that Google holds a monopoly on the Internet market, with two thirds of Americans using its services. The decline in the dollar also seems to have been in favour of Google, as 53% of their revenues are earned outside of the US. The advertising has increase as well but, what really gave a boost was the increase in amount earned by each click on ads, in addition to the 30% rise in mobile phones accessing the Internet.
Google feels so confident about the market, that they announced that “we now feel confident about investing heavily in our future”, by acquiring one to two large businesses every year or so and hiring new staff. After this announcement share prices rose again. So was this just a way of using the situation in the company’s favor? Inducing share prices to shoot up or will they be able to follow through?
Where the recession really stand is difficult to say, it touches every company and every person differently. We all use the Internet on a daily basis; it has become part of our lives like taking a shower or should I say eating, so maybe it is normal that it should be one of the first to see the light at the end of the tunnel. However, the uncertainty of the market and the unreliability on the newspapers to a certain extent makes investor even more nervous. As one never knows how many skeletons still lie in the closet.
The newspapers I have red reported the facts, they did not seem interested in the background, the why, where, when, how and what will this lead to. A few of them such as the Times Online briefly compared Google to what shall be expected from Yahoo and also mentions possible causes of the rise in profit. The Swiss newspaper NZZ, refers to an analysts opinion stating that we should still be vary of the increase in the amount earned by advertisement, as this can fall again and shall not see too much of a rise in the near future. Just to understand how what the news is all about and how these earnings came to be I had a look at Google’s press release. To my astonishment, the newspapers seemed to have taken the story from their, in a copy paste style, there was not more much research done, then what Google presented. Although all the papers even the Daily Telegraph seemed straight forward, I felt there was a lack of personal interest by the journalists on the matter. Are they also bored of report only certain aspects of the happenings in the world?
An amusing read was the CNBC cover on this story, it is an easy read, it seems to be taken from a talk show or a blog, as it is very interactive and written in a everything but formal style, using phrases such as “grab a hanky”, “blew past earnings expectations”. It also compares Google to its competition, which makes it a good quick, interesting update on what is going on, and where the competition stands.
The third quarter results have been overwhelming the media, since last week, again news headlines seem to have a positive spin to them, at least concerning Google.
Google stunned even the analyst with its third quarter results, catapulting its share prices up, to nearly 4% on the same day, meaning a 120% rise from the bottom of late last year. Google’s net income rose by 27% to $1.64 billion, so much so that Google’s CEO Eric Schmidt announced that "While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us"
From the headlines one could deduct that the recession seems to be over, but then we are faced with news as the one from the Bank of America, were the red figures have spiralled into the billion figures. It sometimes feels as if the newspapers believe or want to believe that the world is still green behind their ears. Sudden unexpected bad news only leads uncertain investors to take impulsive decisions and sell their shares, causing massif bumps in the slow road to recovery. People need to be informed, only then shall they be able to make reasonable and thought through decisions. So why only focus on spreading the so called positive news, instead of researching and letting the world know what is happening and why.
So is the Google news for real, what are the causes for their unexpected profit? And is this sustainable or as in the case of Alcoa only the repercussions of lay offs and sever cost cutting, that shall not be in the companies best interest in the future.
What were the causes for Google’s rise in income? As any company in the recession, they have been holding down cost thanks to their new CFO, however they have not given up their expansion plans, and even during the recession took over a few small business. It is needless to say that Google holds a monopoly on the Internet market, with two thirds of Americans using its services. The decline in the dollar also seems to have been in favour of Google, as 53% of their revenues are earned outside of the US. The advertising has increase as well but, what really gave a boost was the increase in amount earned by each click on ads, in addition to the 30% rise in mobile phones accessing the Internet.
Google feels so confident about the market, that they announced that “we now feel confident about investing heavily in our future”, by acquiring one to two large businesses every year or so and hiring new staff. After this announcement share prices rose again. So was this just a way of using the situation in the company’s favor? Inducing share prices to shoot up or will they be able to follow through?
Where the recession really stand is difficult to say, it touches every company and every person differently. We all use the Internet on a daily basis; it has become part of our lives like taking a shower or should I say eating, so maybe it is normal that it should be one of the first to see the light at the end of the tunnel. However, the uncertainty of the market and the unreliability on the newspapers to a certain extent makes investor even more nervous. As one never knows how many skeletons still lie in the closet.
The newspapers I have red reported the facts, they did not seem interested in the background, the why, where, when, how and what will this lead to. A few of them such as the Times Online briefly compared Google to what shall be expected from Yahoo and also mentions possible causes of the rise in profit. The Swiss newspaper NZZ, refers to an analysts opinion stating that we should still be vary of the increase in the amount earned by advertisement, as this can fall again and shall not see too much of a rise in the near future. Just to understand how what the news is all about and how these earnings came to be I had a look at Google’s press release. To my astonishment, the newspapers seemed to have taken the story from their, in a copy paste style, there was not more much research done, then what Google presented. Although all the papers even the Daily Telegraph seemed straight forward, I felt there was a lack of personal interest by the journalists on the matter. Are they also bored of report only certain aspects of the happenings in the world?
An amusing read was the CNBC cover on this story, it is an easy read, it seems to be taken from a talk show or a blog, as it is very interactive and written in a everything but formal style, using phrases such as “grab a hanky”, “blew past earnings expectations”. It also compares Google to its competition, which makes it a good quick, interesting update on what is going on, and where the competition stands.
(please have a look at: http://www.cnbc.com/id/33343680/site/14081545 to see how the competition is holding up, compared to Google)
Well lets hope that we are on a recovery as they all say!
Till next week,
Bacio
Sources used:
Times online
14.10.09
http://www.ft.com/cms/s/99fb5b2e-b893-11de-809b-00144feab49a,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F3%2F99fb5b2e-b893-11de-809b-00144feab49a.html&_i_referer=http%3A%2F%2Fsearch.ft.com%2Fsearch%3FqueryText%3Dgoogle%26aje%3Dtrue%26dse%3D%26dsz%3D
Times online
16.10.09
Google gears up for fresh expansion
http://www.ft.com/cms/s/0/5c9961dc-b9eb-11de-a747-00144feab49a.html
Times online
17.10.09
Google poised for spending spree
http://www.ft.com/cms/s/0/4496c768-bab4-11de-9dd7-00144feab49a.html
NZZ
16.10.09
Google schreibt Rekordgewinn
http://www.nzz.ch/nachrichten/wirtschaft/aktuell/google_schreibt_rekordgewinn_1.3876501.html
CNBC online
16.10.09
Current DateTime: 04:51:42 18 Oct 2009LinksList Documentid: 31047922
Google Starts to Bleed—In a Good Way
http://www.cnbc.com/id/33343680/site/14081545
Google online
16.10.09
Financial press release
http://investor.google.com/releases/2009Q3_google_earnings.html
Daily telegraph
15.10.09
Google profits increase 27pc to $1.64bn in the third quarter
http://www.telegraph.co.uk/technology/google/6341069/Google-profits-increase-27pc-to-1.64bn-in-the-third-quarter.html
Good analysis of the company results. 6.5/10
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