Google Doubles its Profits

Yawho? by Anonymous Coward · 2006-07-20 20:29 · Score: 4, Funny

Seriously guys, thanks for playing.

Re:Am I missing something? by baadger · 2006-07-20 20:32 · Score: 2, Interesting

But would you have said their expenses has doubled in the same period of time?

No.

The value of engineers by ph1ll · 2006-07-20 20:42 · Score: 4, Insightful

<irony>Google? Are they still around? I thought The Economist had predicted their demise ages ago</irony>

Seriously, it's nice to see a company that values its engineers doing so well.

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--- "We've always been at war with Eastasia."

chairs.... by linRicky · 2006-07-20 20:44 · Score: 4, Funny

I sure would be modded down for this.. but just can't help wondering how many chairs are being thrown at Microsoft after this announcement....

Google's Bad Business Model by Umbral+Blot · 2006-07-20 20:51 · Score: 5, Insightful

And all this money comes from adwords? Does it bother anyone besides me that google has only one source of revenue? It's like a company that sells only one product ... if demand for their product decreases the company dies. For example consider this possible situation: Microsoft bundles an adblocker with IE, automatically turned on, that blocks, among other things, google's adwords. Even if google sues MS could keep it in court long enough for google to go under. Scary isn't it?

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Philosophy.

Re:Google's Bad Business Model by Umbral+Blot · 2006-07-20 21:01 · Score: 4, Funny

Oops, I forgot: Microsoft isn't evil anymore. I guess the folks at Google can sleep safely.

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Philosophy.
Re:Google's Bad Business Model by bluebox_rob · 2006-07-20 21:09 · Score: 5, Funny

And all this money comes from adwords?
Are you kidding? Have you even been to the Google Store?! They do t-shirts, mugs - heck they even sell Lava Lamps! I'd like to see the adblocker that can block those babies...
Re:Google's Bad Business Model by WindBourne · 2006-07-20 21:15 · Score: 2

Not really.
At this time, MS is blocked by the feds and europe from doing what you suggest.
Second, they are in the process of diversifing right now.

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I prefer the "u" in honour as it seems to be missing these days.
Re:Google's Bad Business Model by killjoe · 2006-07-20 21:22 · Score: 3, Interesting

Ms would never do that because they are about to go into the ad business themselves. I suppose they could block all ads except theirs but I think that would end them up in court in a jiffy.

They have been floundering a lot lately, it's a mystery to me why they are so keen on getting into the search and advertising business at all. Who knows what makes Ms tick anymore. As far I can see they gone insane.

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evil is as evil does
Re:Google's Bad Business Model by DrEldarion · 2006-07-20 21:30 · Score: 2, Insightful

Currently, Adwords is the MAJOR source of revenue (they sell a few search appliances, but that's pennies compared to Adwords), but Google Checkout will hopefully be a decent income source, especially once Google Base becomes more popular.
Re:Google's Bad Business Model by AIX-Hood · 2006-07-20 21:32 · Score: 2, Insightful

There's a big difference between something that requires user intervention to get going, and something which blocks all ads when you install the main browser.
Re:Google's Bad Business Model by khendron · 2006-07-20 23:26 · Score: 3, Insightful

Isn't this like say TV networks and radio stations have a bad business model, because all they sell are commercials?

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Life is like a web application. Sometime you need cookies just to get by.
Re:Google's Bad Business Model by instantkamera · 2006-07-20 23:59 · Score: 2, Insightful

" Does it bother anyone besides me that google has only one source of revenue? It's like a company that sells only one product..."

1) no. it doesnt because no, thye dont. What about the new google payment system? What about the google-store.com that was mentioned already (not that i think that is a huge revenue turner)? That is not to mention all the free shit they give away that they could charge for. There's gold in them there hills.

2) Even if it was, tons of companies only sell one product. As long as they keep the buyers of said product buying ...

A lot of this by thealsir · 2006-07-20 20:51 · Score: 5, Interesting

was due to one-time gains, such as the sale of stock in BAIDU.com. That's why the stock was down in after hours. This nonsense of beating estimates by a huge amount is a giant Wall Street smokescreen. Non-recurring things factored out, Google barely beat estimates. Growth is slowing, the CEO himself said that. I imagine more money is going to be pumped out of this in the future (admittedly YHOO had a negative effect on GOOG and BIDU).

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Do not downmod posts "overrated" simply because you disagree with them.

Re:Am I missing something? by anagama · 2006-07-20 20:52 · Score: 3, Interesting

Awsome investment. At this earnings level, it will only take 166 quarters of revenue to pay for a share. Expenses of course, will stretch that out to much more than that 41 year figure. I just don't understand how people value stocks.

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What changed under Obama? Nothing Good

Google is a verb now by William+Robinson · 2006-07-20 20:53 · Score: 5, Funny

Offtopic -1

Does somebody else find it funny, how the web sites have become verbs. Look at the button 'Google Slashdot'. Imagine 'Slashdot Google' or 'Slashdot University of California' buttons to kill the web sites.

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hilarious

Value for money by simon_hibbs2 · 2006-07-20 20:54 · Score: 3, Interesting

$2.33 earnings per share, at a cost of $387 per share. That's a return of 0.6% per year on your investment so at this rate it will take about 166 years to get your investment back in earned value.

Yep, these Internet stocks sure are amazing value for money.

Simon hibbs

Re:Value for money by Threni · 2006-07-20 21:27 · Score: 2, Insightful

> $2.33 earnings per share, at a cost of $387 per share. That's a return of 0.6% per year on your
> investment so at this rate it will take about 166 years to get your investment back in earned
> value.

Er..you own the share too, so you'd have $389.33. Then there's dividends - many people own shares in companies that have negligable growth for years, purely because the dividends return more money than they'd get as interest from a bank.
Re:Value for money by Anonymous Coward · 2006-07-20 21:27 · Score: 5, Informative

That's $2.33 a quarter, buddy. Google's P/E is around 60, which is triple the typical blue chip, but typical blue chip companies are not growing at 70% annualized growth rates. And that's just the trailing P/E. Their forward-looking P/E is 30. Blue chip companies like Coca Cola and General Electric are trading at P/Es of around 20. And Google's profit margins, at around 25%, continue to astound.

Google is quickly becoming a cash cow. They have $9 billion in cash right now. Microsoft has around $30 billion. That is a truly incredible comparison, given Google's relative youth.

It's an expensive stock, but hardly as mis-priced as you seem to think.
Re:Value for money by KokorHekkus · 2006-07-20 21:35 · Score: 2, Interesting

Yes because I'm sure this will be the only growth Google sees in the next 166 years.

Totally agree with you there that Google will continue to grow.

Acutally I don't see no reason why Google shoulde become as big as Microsoft (no, just as big, not the NEXT Microsoft), Currently Google has the a revenue that's about 1/6 of Microsofts and a market value that's roughly half. Profit margin looks good as well even if it's 3/4 of Microsoft. On the other hand O think Google stands a better chance of continued expansion and renewal than Microsoft which has had a bad trackrecord (financially) with trying to expand into new areas after pretty much saturating the desktop niche and facing stiffer competition on servers.

Will Googles stock rise even higher though? Don't think so.
Re:Value for money by ClassMyAss · 2006-07-20 21:58 · Score: 4, Interesting

...at this rate it will take about 166 years to get your investment back in earned value.
Only if you assume that Google sends back 100% of their earnings to the shareholders - as I recall, it's generally a bad sign if a company is paying out everything it takes in, and the ideal situation is more like 50%. I don't know what Google does, but in any case, I get your point.

However, pricing on tech stocks (in particular) has always been more about capitalizing on fear, greed, and hype as they pump up and drag down the stock price than about any sort of reasonable analysis. Everyone knows that everyone else is irrational (and everyone knows that everyone knows, etc.), so it's quite difficult to assign any sort of "value" to normal stocks, let alone public sweethearts like Google. You're just irrationally speculating on other people's irrationality in the hopes that it's the most rational move to make. You'll probably recall that before the IPO a lot of people were screaming that $100/share was way too high for a company with so little potential for further growth. It appears they were wrong, clearly. Is $400 too high now? Who knows...all I know is I don't have the money to be playing these kinds of games with it!

Besides, how many stock traders do you know that got rich sitting on a basket of stocks and watching the dividends trickle in?
Re:Value for money by simon_hibbs2 · 2006-07-20 22:07 · Score: 2, Interesting

Fair enough, and thanks for the correction.

Their share price still seems horribly overblown. Yes I know they're aprofitable business, as I said in an earlier reply, none of this is realy a probelm for them as an operating company. They have plenty of cash and are very profitable, but their shares simply are not worth half what they currently stand at. The problem with cash though is that it's not earning anything (much), and any investment you do make with it has to earn at least as much as your current business or it will actualy make you look worse.

I think Google has a bright future. It's share holders (if buying at anything like this price) not so much.

Simon Hibbs
Re:Value for money by vidarh · 2006-07-20 22:11 · Score: 4, Informative

As someone else has commented, the share is yours to start with so you can't count the price you aquired the share for as part of the earned value.
The earnings does magically not get added to the share price, so you still have only $387, UNLESS the share price increases OR the company pays the full earnings out as dividends (in which case you'd have to subtract tax on it anyway, so your net return would be even lower than 0.6%, the same would apply if the share price increase and you sell).
Most tech companies, though, never pay dividends (and if they do, it will certainly never be more than portion of their earnings - and so in this case 0.6% is the upper limit) - people speculate in continued share price growth.
So if you hold the share the maximum return is equal to the earnings per share. In Google's case this is far below what you'd get at far lower risk elsewhere (case in point: I get around 5% on my UK savings account and short term bonds)
Of course, if you sell the share you may or may not make money from fluctuations in the share price which may make it a worthwhile investment.
Grossly simplified, people look at the earnings per share because it is one of many measures of whether the share is cheap or expensive. A high earnings per share (in percent of share price) means there is a higher likelihood of continued share price growth (but note that many other factors will also play in). A low earnings per share in percent of share price means that continued share price growt is unlikely unless the market believes that earnings will continue to grow rapidly to catch up with the share price increases.

Is it? by WindBourne · 2006-07-20 20:57 · Score: 3, Insightful

Is it the value of the engineers?
or is the value of a natural monopoly in a truely open market as opposed to a tied monopoly in closed market such as the MS's?
Do not get me wrong. Google's engineering is what got them to this size. After all, Alta Vista, Yahoo and MS held 95% of the market when Google started. It is Googles superior ideas that enabled them to beat these other companies.

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I prefer the "u" in honour as it seems to be missing these days.

Re:Is it? by masklinn · 2006-07-20 21:08 · Score: 4, Informative

Reading comprehension 101: Google's engineers are valuable != Google values its engineers.

GP used the later, you understood the former, they have fairly different meanings.

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"The way we can tell it's C# instead of Haskell is because it's nine lines instead of two." -- wadler
Re:Is it? by WindBourne · 2006-07-21 01:54 · Score: 2, Insightful
I switched in the early days for a number of reasons:
1. The search is the most applicabale that that I seen. Yahoo was better when they were young , but did not scale.
2. AV, Yahoo, and MSN had the entire first page as paid ads (even though it looked like they were real).
3. Several simple text ads vs. the huge number of ads that AV/Yahoo/MSN ran.
4. Simple page means it loads fast. Real Fast.
5. They pushed the distributed tech.
Call it cool if you like. They were simply one of the most advanced tech firms going and getting better.
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I prefer the "u" in honour as it seems to be missing these days.
Re:Is it? by Quino · 2006-07-21 07:32 · Score: 2

I'm sorry but that's crazy.

It was a practical, pragmatic choice: Google worked, *none* of the other search engines did. And it worked well, I remember specifically thinking that Google made the internet useful again to me, I could find information on the internet again. The only thing that amazes me is that there are some people who swear by other search engines (they must not have tried Google, in my opinion!).

I know that the other search engines started copying, to some degree, Google's way of doing things. In my last Pepsi challenge only Yahoo came close, but Google was still getting me the most relevant search results.

I wonder... by kripkenstein · 2006-07-20 20:57 · Score: 4, Interesting

Google had a net income of $721 million, according to TFA. Microsoft's net income last quarter was $2.83 billion in their last report.

So, Microsoft still have a far greater net income than Google. Still, Google is rising fast. Will we someday see Google's net income overtake that of Microsoft, I wonder?

Re:I wonder... by Anonymous Coward · 2006-07-20 21:33 · Score: 4, Funny

You could buy a lot of chairs for $2.83 billion :)
Re:I wonder... by Elemenope · 2006-07-20 23:09 · Score: 2, Insightful

Not to be a Microsoft-Bash party pooper, but MS has made a few things that 'work', and even work well (as you mentioned, BASIC). The two that come most immediately to mind in the present world are MS Word and MS Excel. I personally use Open Office, not because it is better (because it isn't), but because I am poor. For those who can afford it, these programs are worth the investment. Though, I will admit this does not make up for the crap we have had to put up with from their OS department.

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All the techniques ever used to make men moral have been themselves thoroughly immoral... (Nietzsche)

Yahoo = adserver and other problems by sjwest · 2006-07-20 21:08 · Score: 2, Insightful

I had a yahoo webmail account, the new webmail beta needs new windows or mac, since i have neither webmail beta is a no go. Explain to me why webmail needs windows or mac binaries - spyware ?

Geocities trashed my webspace too after a couple of years no explaination about that either

What can we learn from yahoo ?

Im not going to spend much time here 'exploring'
I'm not going to use, or buy webmail plus
If yahoo think i visit yahoo just for there webadverts (screen coverage is increasing) then think again.
360 - blog platform is um full of privacy issues for me, and too late
? The 'portal' died ?

My google adwords by Anonymous Coward · 2006-07-20 21:09 · Score: 5, Interesting

I pay google around 14000$ per month for adwords. I pay yahoo about $500. In both places, I try to buy as much advertising as I possibly can. Yahoo simply doesnt deliver the clicks, and in fact the clicks coming from Yahoo have been FALLING if anything. Pathetic.

721 Million dollars? by Chuck+Chunder · 2006-07-20 21:28 · Score: 3, Insightful

I wish I could come up with that kind of "bad business model"

Seriously though your "possible situation" is 100% laughable. If MS released such a browser it would take a long time to seriously penetrate the market and there would be strong resistance not just from Google. If the browser won't show ads then 99% of sites out there would refuse to serve it content.

Google will certainly face challenges but to suggest that adwords revenue will simply disappear is absurd.

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Another thing by thealsir · 2006-07-20 21:37 · Score: 2, Insightful

Why is news about google stock on the site? Since search was down, I didn't get to see if slashdot posted news about Yahoo's stock dropping 22% in a day, the largest single drop ever, on Wed. Either make a customized finance.slashdot.org (which I'm sure a lot of slashdotters would be quite happy about, focusing on the financial aspects of certain tech companies and F/OSS finances) or don't report news at all.

But please, none of this "Logo Toilet Paper to replace Charmin at the Googleplex" news. I find slashdot diverging from its focus when it reports minutia about google. Either report all minutia, or report none, and especially don't bias toward certain companies (Yahoo, an equally important company, isn't nearly as well followed?)

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Do not downmod posts "overrated" simply because you disagree with them.

Google Operating System by ActiveMatx · 2006-07-20 21:37 · Score: 4, Interesting

Since we are talking about the future of Google... How about Google OS version 1.0. Now I am sure that would be something awesome. With the amount of revenue they have, it's not that far-fetched to think they aren't capable of creating their very own OS. Besides, with the amount of computers we have out here in the world, there really are only 3 operating systems to choose from. Doesn't really seem like that many, considering the amount of cars of types of televisions there is out there.

Re:Google Operating System by pedantic+bore · 2006-07-20 22:13 · Score: 5, Funny

With the amount of revenue they have, it's not that far-fetched to think they aren't capable of creating their very own OS.
People said the same thing about Microsoft.

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Am I part of the core demographic for Swedish Fish?

it's all about infrastructure by adam · 2006-07-20 21:39 · Score: 4, Interesting

look at Amazon-- from what I understand (ianastockbroker) their actual inventory itself may not even turn a profit at all, but third party sales and their e-commerce licensing (to Toys-R-Us, Target, etc) makes them more than profitable. this is possible because they have the infrastructure built. when it comes down to it, people like to click on ads and buy stuff. not you, not me, but a percentage of people do. enough to make the ad game profitable, as seen by advertising in other fields (tv, billboards, hell even spam.. someone is clicking on all those links to buy v1agr4 or you and I wouldn't get so much spam).

google is in the process of widely diversifying, and even if microsoft DID roll out a universal adblocker that was installed by default, I can envision several scenarios that google adwords infrastructure would still be useful for. how about when google unveils their free natiowide wifi metropolitan internet access.. of course it's free in exchange for using Gbrowser with AdViewing enabled.

I use gmaps on my BlackBerry8700 all the time.. google's success is all about creating functional/useful utilities (email, mapping, search engine, blogger, gcheckout, whatever) and then stuffing ads in there. The fundamental question is not whether MS can block them, it's whether ads can be profitable, and I believe the answer is yes.

..as an aside, the interesting thing [for me] to ponder, is whether google will ever adapt their business model to gain profit directly from user subscriptions for various services, or whether it will always remain ad-revenue driven

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I am Jack's complete lack of surprise.

The extra money probably came from by SFSouthpaw · 2006-07-20 21:39 · Score: 4, Funny

Yahoo's employees googling for better jobs.

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---southpaw

Re:Am I missing something? by caluml · 2006-07-20 21:57 · Score: 2, Funny

I just don't understand how people value stocks. Buy low, sell high?

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Will Goolge eclipse Microsoft? by CurtMonash · 2006-07-20 21:59 · Score: 2, Interesting

Richard Brandt argues with passion that Google will eclipse Microsoft. The idea is that all the reasons why Microsoft beat everybody else don't apply to Google. I disagree, however, because I don't see Google's advantage as having much sustainability.

On the other hand, I was fairly late to realizing how sustainable Microsoft's advantage would prove, back in my stock analyst days, so do consider the source ...

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To err is human. To forgive is good system design.

Clickity click, Google wins! by Antifuse · 2006-07-20 22:03 · Score: 2, Interesting

And how much of that profit is due to AdSense click fraud?

Google ... and beta by corychristison · 2006-07-20 22:43 · Score: 2, Funny

As much as I love to use Google [the search engine mostly] I am sick of this 'Beta' thing.

Everything that comes out of any company is now branded as 'Beta' Software / websites. The new Microsoft Live crap, Yahoo is branding their crap as Beta... I'm sick of it.

Now, perhaps they could hire Tom Cruise to utilize his witchcraft to somehow get Beta as a trademark -- then they could lay on the royalty fee's on any company using it for commerical use -- I'm sure that would quadruple their profits! :-)

By the way -- did I mention how much I hate the word 'Beta'?

Holding breath., by rzekson · 2006-07-20 22:58 · Score: 2, Insightful

I'm holding my breath waiting until Google, the holy virgin and the axis of all goodness, donates a fraction of their profit comparable to that contributed by the much hated Microsoft.

Re:Am I missing something? by clickclickdrone · 2006-07-20 23:45 · Score: 2, Interesting

Not sure why this got marked Troll. It's a valid point, Google (and others) are making good money but operating on an insane ratio that makes their current stock price look highly optimistic. Many industries operate on a 20-25 ratio but some of the newer tech stocks are on 400+. Much of the problem though is that the markets have no real way yet to analyse how well a tech company is doing.

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I want a list of atrocities done in your name - Recoil

Re:Amazing by ibjhb · 2006-07-21 02:10 · Score: 2, Insightful

Do keep in mind, especially with financial transactions, there are different laws in different countries and they may not be able to quickly release a certain product in your country.

Slashdot... A nice forum... by ebtebee · 2006-07-21 05:14 · Score: 2

to read and archive anything and everything about Google. It has all the news and more and a huge GOOGLE fan base. Wonder if they are related?

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