Google Reports Increased Profits

finance.slashdot.org by Anonymous Coward · 2004-10-21 19:34 · Score: 5, Insightful

Tune in tomorrow for the earnings reports from railroad and textile companies, and we'll discuss whether Amazon P/E ratio makes sense to hedge funds managers.

Thank you for being with Slashdot Finance. Buy LNUX!

That's how IPOs goes by Dancin_Santa · 2004-10-21 19:35 · Score: 3, Insightful

Say you have a bank account. You are suddenly inundated with tons of cash (almost 2 billion dollars worth!) because you pimped yourself out. Then you stick all that cash in the bank account.

Even at a very low interest rate you can get a significant return on that money.

Obviously, you'd like to do stuff with it like buy jet planes for your managers and little stickers and baseball caps for your engineers, so your total return will be less than expected. But in the end, your huge pile of cash garners you a very nice gain just at basic interest rates. Couple that with some savvy investing (no-load mutual funds!) and you can have yourself quite a bit more "revenue" than before you sold yourself out.

Re:That's how IPOs goes by hkmwbz · 2004-10-21 20:05 · Score: 4, Insightful

In what way doesn't Google have "salable products"?
We are Google's product. We, the users of their free and popular services. And there are a lot of us out there. To me, Google Groups alone is invaluable in finding information. I use it several times a day.
And not only that, but people don't seem to be very concerned about blocking Google ads. They block banner as and popup ads, and all those nasty things, but Google's nice and unintrusive text ads are often let through.
I think you are underestimating Google's product line. You are one of its products, and Google is making money because millions of people like you and I use them, often every day. And as long as Google continues to be useful and offer something we want, we'll use it, and we'll spread the word, and more and more people will use it.

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Clever signature text goes here.

Re:Google Moogle by metlin · 2004-10-21 19:36 · Score: 2, Insightful

Well, I don't think it's entirely ads (emphasis mine)-

Google and rival Yahoo each get a significant portion of their revenue from Web search advertisements, a lucrative and fast-growing market.

That must mean that they have alternate sources. For instance, Google does sell search-boxes and the like. I'm sure there are other sources of income, too.

Glad to see it by Bill_Royle · 2004-10-21 19:38 · Score: 4, Insightful

Despite the guaranteed criticism any company that "makes it" gets, I think Google's a good example of good ideas paying off.

Do I worry that they'll become another Microsoft or Oracle? Sure - but the best way to prevent that is to support the good that they do, while expressing directly to their feedback lines the things you don't like.

Thus far, they seem to be listening. I hope they keep up the good work!

Re:Good by WIAKywbfatw · 2004-10-21 19:43 · Score: 5, Insightful

99 percent of shareholders invest in a company for one reason and one reason only: to make money. They don't care about ethics, doing business in a friendly manner or the warm fuzzy glow inside that employees take home with them at the end of the day, they're only interested in the almighty dollar.

And, with the way that public companies have to operate by law in the US, that means doing whatever it takes: the boards of US companies are legally obliged to increase shareholder value as much as possible, and if that means no more Mr. Nice Guy, well, that's just tough for you, for me, and for anyone else that gets in the way of the bottom line.

Want to know the one way to keep a company from running into these sort of hassles? Stay privately owned rather than become a publicly traded company.

Of course, that means you can't properly compensate all the people (and venture capitalists, if any) that got you to where you are, and that presents its own set of problems including staff retention, but that's another story.

Bottom line: don't expect Google to be your best friend from mow till the day that you die.

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"Accept that some days you are the pigeon, and some days you are the statue." - David Brent, Wernham Hogg

Re:Google Moogle by mirko · 2004-10-21 19:53 · Score: 3, Insightful

Google has region-based advertising :if I am looking for Korg from Switzerland, I'll get links to the music shops around me.
(This is the difference with many sites, incl. Slashdot who propose me some US-centric ads which I do not even care to read anyway because I am just so untargetted that it almost sounds unwelcoming.)
Anyway, it doesn't work that bad though I have one issue : people who buy advertising for their oiwn "search engines". At the end, you get their add for unrelated products and this is just polluting.

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Trolling using another account since 2005.

Don't take this as a troll, but.. by mumblestheclown · 2004-10-21 20:10 · Score: 4, Insightful

Closed source
Multi-Billion dollar corporation
Single point of information control
Monopolistic Practices
Secretive

Explain to me again why we should be cheering for them? Yes, it's a useful service. But MS stuff is likewise useful (despite what many of you think). So what if it's free for you to use? They still have a business model.

The best thing I can say about google is that it is unsustainable. Consider if the company is worth X billion dollars now. Well, even the most armchair businessman here will tell you that it wouldn't take a billion dollars to build a duplicate google system. It wouldn't even take a twentieth of that. And, while google is nice and popular now, if a better search engine came along with slightly fewer ads or whatever else perceived benefit, it would seriously erode google's traffic and cause actualy *gasp* competition and choice for advertisers.

and no, Yahoo and its overture systems are not an alternative.. they are a different service that targets different markets.

What I am suggesting is that google is selling a very generic, easily duplicatable service if somebody just got the funding to hire the right engineers. Google knows this.. that's why they are trying very hard to build all sorts of peripheral stuff like gmail and so forth, but the fundamental (99%+) business is still the search engine.

Re:Don't take this as a troll, but.. by mpoulton · 2004-10-21 20:31 · Score: 4, Insightful

it wouldn't take a billion dollars to build a duplicate google system. It wouldn't even take a twentieth of that.

Really? They have a LOT of hardware. Lots of it. It's specialized, too, not all off-the-shelf stuff. More importantly, though, they have intagible assetts worth much more than their equipment -- code. Googlecode is about as non-trivial as it gets. To write it all, they have some of the smartest engineers in the world, and those engineers aren't cheap. Just as important as their technology itself, they have a massive user base that no other search engine can match without years of media exposure and word-of-mouth. They have an established reputation for fairness and avoidance of underhanded manipulation of results. I believe those factors make it impossible to compete with Google in the short term, even if their hardware and code could be replicated for a few hundred million dollars (a more likely figure than $50M).

Investors like short-term results. Try telling your VC's that they should invest $150M in a search engine project that replicates something already in existance, and won't be a moneymaker for at least 5 years. Think they'll bite?

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I am a geek attorney, but not your geek attorney unless you've already retained me. This is not legal advice.
Re:Don't take this as a troll, but.. by Anonymous Coward · 2004-10-21 21:15 · Score: 2, Insightful

You're right. Eurotunnel was never built. So silly of me. Also: private equity doesn't exist. It's hallucination shared by me and a few million of my closest friends. Oh yes, and also large companies who have the resources on hand never invest their own money in large engineering projects, because as we all know, no satellites have ever been launched.
I would mention my credentials in money raising to you (but I have sat on both sides of the table), but, I mean, what's the point? This is slashdot. You learned a little about VC funding during the dot com days and now everything looks like a nail to you, as it were.
Investors are highly unlikely to give that sort of money to an unproven bunch of slick speaking types with a foosball table in their office but not much else, but there are certainly very real situations where such things can be funded, despite your thumbnail of knowledge.

Re:Good by WIAKywbfatw · 2004-10-21 20:23 · Score: 3, Insightful

The reason why Google has succeeded has more to do with the fact that it has an excellent product rather than the fact that it is a friendly company.

There are plenty of companies out there that have similar philosophies and that fail, you just don't hear about them because they didn't have a product good enough to stop them from failing.

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"Accept that some days you are the pigeon, and some days you are the statue." - David Brent, Wernham Hogg

"Phase 2" by Vollernurd · 2004-10-21 20:25 · Score: 3, Insightful

Google's recent run of new products and financial results is starting to remind me of that old Onion story about how "Starbucks Starting on Mysterious 'Phase 2'". All their outlets were closed and boarded-up and Starbucks management were readying their mind-control devices.

Now Google is getting ready for its own "Phase 2" having made me sign up for Gmail, that desktop search thing, etc.

Time to put my tinfoil hat back on.

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Smokey, this is not 'Nam, this is bowling. There are rules.

Re:Good by shrykk · 2004-10-21 20:30 · Score: 5, Insightful

Yes, but part of the excellence of their product is that their ads don't piss us off. They realised you will put up with a few ads in order to get an excellent product and the day they sell out peoples private data or start bombarding us with pop-ups is the day we'll walk away.

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#define struct union /* Reduce memory usage */

Re:Not so rosey by kahei · 2004-10-21 20:39 · Score: 3, Insightful

If your father's on the board, that narrows down your identity pretty well -- I don't think posting AC will help much!

Which leads me to suspect that either

a) Your father is not on the board because you are Supertroll (trolls at a rate of 3 billy goats per minute!) or

b) Your father is going to have harsh words with you if he ever reads slashdot :)

I agree with what you said, though. It's cute the way geeks randomly divide companies into 'good' and 'evil' while the companies just go on trying to make a profit -- kind of like primitive man personifying the thunder and rain.

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Whence? Hence. Whither? Thither.

Re:Google Moogle by badrad · 2004-10-21 20:42 · Score: 2, Insightful

Actually, a couple months back Yahoo switch away from Google to an internal search engine.

Re:Yahoogle by Anonymous Coward · 2004-10-21 20:47 · Score: 4, Insightful

Holy crap!

Hey, if Windows can sue Lindows just cause it is spelled similarly, cant Google make them stop doing that?

I mean that is almost identical except for the logo change.

Re:Dot-com boom in a single corporation by spagetti_code · 2004-10-21 21:34 · Score: 3, Insightful

I've got to agree, this smells of dot-com euphoria. The company has a market cap of 40bn on 52mn of net profit. Despite all the good things google is doing, their core revenue comes from web ads which is a fickle business. They've done a hellofa job, providing a better product (web ad delivery) than anyone else has before, but it sure is a risky lifestyle. I'd really be interested in overall click-through rates.

I haven't seen anything that will create a more solid/reliable/long term revenue stream yet. I'd bet that the day they start charging for gmail or desktop search, their loyal customer base would desert them.

Perhaps we could open the floor to slashdotters - where do you think google could up their revenue stream without annoying us loyal customers?

Oblig John Burr William quote by bojanb · 2004-10-21 21:35 · Score: 2, Insightful

"A business is only worth the profit it will generate from now until doomsday, discounted back to the present, adjusted for inflation."

So there.

Where's the evil? by JaredOfEuropa · 2004-10-21 22:02 · Score: 4, Insightful

Closed source

So? I can see why they wouldn't want to be too free with their search engine technology. For once, someone might easily duplicate it, but more importantly, people might exploit inside knowledge of the system to bump their own webpages up in the ranking. Pageranking has to rely on certain 'tricks' rather than a fully objective and fair mechanism, and in this case, obscurity is way to go.

Multi-Billion dollar corporation

I don't see this as a reason to stop cheering for them. Nothing wrong with financial success.

Monopolistic Practices

The question is: do they simply have a monopoly on certain things, or do they use their monopoly to illegaly control prices or keep out competitors? For one, I don't really see where the monopoly is... advertising? I wasn't aware that advertisers have to go through Google these days...

Secretive

See my first point.

Google has a good and eminently useful core product which they provide for free. They make money off ads like so many free web services, but they choose to do so in a rather low-key manner. In addition they are starting to offer other free services, not by copying the competition, but by listening to the customers and raising the standard for everying else. Compare GMail to other free email services, and you'll see what I mean.

I guess many people are cheering for Google because this appears to be a company with good ideas, but also with good ethics, a drive to do things right, and attention for their customers; qualities that other companies often see as cost centers and something that they have to pay lip service to, to further their public image. With Google it seems that these very qualities are the things that made them succesful. It's nice to look at a company that works because of these good practices rather than despite them, because it reinforces our belief that the world works as it should, and that the good guys can finish first. (Yes yes, it sounds melodramatic, but I don't really have any other way to put all this).

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If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...

Re:Google Moogle by hachete · 2004-10-21 22:16 · Score: 2, Insightful

Yahoo bought overture (which I think used to be AllTheWeb)

http://searchenginewatch.com/searchday/article.php /2234821

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Patriotism is a virtue of the vicious

Re:IPO Price Not Crazy After All by jtwJGuevara · 2004-10-22 01:06 · Score: 3, Insightful

No, the IPO wasn't too crazy, but the newly projected stock price is well beyond crazy. I was viewing CNBC this morning and heard that one investment firm (I forget which) upgraded google's stock to perform in the $200 dollar range. That would give google a P/E of about 100. Such a price to earnings ratio is way too much, regardless of how well the organization is performing. Such speculation is the reason we had the late 90's bubble and the '29 crash.

Several ways to look at this by bigberk · 2004-10-22 01:19 · Score: 3, Insightful

Given the way the stock price has increased, I think many of us were correct when we identified the blatant poo-pooing of google's IPO as a deliberate strategy by the organized "analysts". It seemed out of place at the time.

Rule #1: Analysts are full of shit. They always have been, they always will be. You should have gotten suspicious when you kept hearing 'headlines' about experts warnings against GOOG. Do not ever act based on analyst opinions you see on finance.yahoo; recommendations on CNN, CNBC. Take these opinions with a scoop of salt.
Rule #2: The periodic earnings report mean next to nothing. You think I'm joking? Ask any real accountant. Periodic financial statements are not audited, nor do they reflect an entire operating cycle. Expenses might be deferred to later on. The real story is to be seen when a year or two has passed. After such a period, you will have seen two audited reports and the period is sufficiently long that revenues and expenses can't be shuffled to look favourable. In other words, if something bad is happening it can't be hidden forever.

Those are my recommendations, as an accounting student and someone who has done decently with market investments.

Re:And since they're a business... by magarity · 2004-10-22 03:09 · Score: 2, Insightful

I wonder what they're going to do with the extra money?

What "extra money'? When a stock price goes up, the company doesn't get a penny. A company could issue yet more stock at near the newly high price, but that isn't what's happening here.

As far as the search engine wars go, well, I think they've pretty much been declared the winner for now

Please see: AltaVista, Yahoo!, Netscape, and InkTomi all of whom were declared "the winner for now" back in their respective days. Of these, only Yahoo! has transitioned into a major portal. Google is buying up a lot of miscellaney technologies so might be transitioning into an all purpose portal as well.

HAHA sure they DID it VANILLA ! by dindi · 2004-10-22 03:27 · Score: 1, Insightful

yep, they slashed all the RELEVANT results with the vanilla update, so all those who are serious now have to fight over $1+ US /click on googleads.

They make extra with adsense too ...

in the meanwhile I tend to search on yahoo more and more since on google the usable results fall back on the 10+ page range many times ..

I really keyword/title my sites so it is relevant to the search and content, and still I see results that are not even about the subject ....
seems that they are using a "reverse ranking" the more relevant the further from the top ...

yes mod me down I am just a looser whoi lost his rankings, and now I am upset ....

but wait, no .... I really use yahoo now ..

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