Wednesday, February 02, 2005
Wednesday, February 2, 20057:58:25 PMViewed 1 time
Google shares soar to record on strong sales and profit By Saul Hansell The New York Times Thursday, February 3, 2005Google shares rose more than 10 percent on Wednesday after the Internet search engine surprised Wall Street by announcing that its sales and profit margins grew much faster than expected in the fourth quarter.The results, announced late Tuesday, were in sharp contrast to the warnings in November that Google's revenue for the quarter would probably decline because of increased competition and a slowing of what had been a rapid pace of growth.Google's shares surged Wednesday to an intraday high of $216.80, a record. The company sold shares in its initial offering in August for $85 each. In late trading the stock was at $19.68, or 10.3 percent, at $211.58 on the Nasdaq. "More humans around the world are using Google, and they are spending more time with Google per human," the chief executive, Eric Schmidt, said in an interview. At the same time, he said, "Advertisers are bidding higher because they understand the value of clicks better." Google makes nearly all of its money when users click on the ads that appear on its search site and on the sites of other publishers for whom it sells ads. The price per click is determined by an auction.Bid prices, Schmidt said, have increased sharply outside the United States, where Google has made substantial investments over the past year.Google, based in Mountain View, California, reported a profit of $204 million in the fourth quarter, up from $27.3 million a year earlier. Revenue doubled to $1.03 billion. Its revenue grew nearly as fast from the network of sites on which it sells ads as it did for sites it owns, even though Google had predicted that the network growth would slow.Ad revenue from Google's sites was $530 million, up 118 percent. Ad revenue from the network of other sites was $490 million, up 92 percent, but Google paid $378 million of that revenue to the sites' owners.Payments to other sites, however, are declining as a percentage of network ad revenue. Google paid 77 percent of its network revenue to other sites in the most recent quarter, compared with 85 percent a year earlier. That came despite sharp competition from Yahoo, which is also bidding to sell ads for other sites.Google's profit was equal to 71 cents a share. Wall Street, however, excludes noncash charges for stock option grants and some other items from its estimates. On that basis, Google earned 92 cents a share, while analysts had expected 77 cents.Schmidt said that the warning Google issued in November, which was in a regulatory filing, had come at the suggestion of Google's lawyers and that while he expected growth to slow eventually, that was not happening now.Still, he said, the most recent quarter exceeded his expectations."We expected a good quarter," he said, "and it turned out to be exceptional."Jordan Rohan, an analyst with RBC Capital Markets, said that while he had expected Google to do well overseas, he was especially surprised at the company's growth in the United States.Several market research companies have said that Yahoo is gaining on Google, but it appears that Google's share of search revenue increased."People are starting to use Google in more ways and more often than ever before," Rohan said. "They may only use Yahoo to look up specific things."Schmidt said that Google now had more advertising revenue than any other company. And indeed its revenue, after payments to other sites, was $654 million, compared with $618 million in the fourth quarter for Yahoo, the previous leader. Google did not make any forecasts of future sales and earnings, which left analysts struggling to figure out how to adjust their own projections. Rohan, who has not finished adjusting his forecast, said that his estimates for sales and profit would be increasing and that he expected Google's share price to rise.Schmidt said one priority for Google would be the personalization of a search, taking advantage of information about the interests and attributes of each user to present better results. This has been a focus of Yahoo, which has a much bigger database on individual users than does Google."Our priority is to have more information, delivered more personally, more globally, with more targeting of who the end users are and what they are looking for," Schmidt said.
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Google shares soar to record on strong sales and profit By Saul Hansell The New York Times Thursday, February 3, 2005Google shares rose more than 10 percent on Wednesday after the Internet search engine surprised Wall Street by announcing that its sales and profit margins grew much faster than expected in the fourth quarter.The results, announced late Tuesday, were in sharp contrast to the warnings in November that Google's revenue for the quarter would probably decline because of increased competition and a slowing of what had been a rapid pace of growth.Google's shares surged Wednesday to an intraday high of $216.80, a record. The company sold shares in its initial offering in August for $85 each. In late trading the stock was at $19.68, or 10.3 percent, at $211.58 on the Nasdaq. "More humans around the world are using Google, and they are spending more time with Google per human," the chief executive, Eric Schmidt, said in an interview. At the same time, he said, "Advertisers are bidding higher because they understand the value of clicks better." Google makes nearly all of its money when users click on the ads that appear on its search site and on the sites of other publishers for whom it sells ads. The price per click is determined by an auction.Bid prices, Schmidt said, have increased sharply outside the United States, where Google has made substantial investments over the past year.Google, based in Mountain View, California, reported a profit of $204 million in the fourth quarter, up from $27.3 million a year earlier. Revenue doubled to $1.03 billion. Its revenue grew nearly as fast from the network of sites on which it sells ads as it did for sites it owns, even though Google had predicted that the network growth would slow.Ad revenue from Google's sites was $530 million, up 118 percent. Ad revenue from the network of other sites was $490 million, up 92 percent, but Google paid $378 million of that revenue to the sites' owners.Payments to other sites, however, are declining as a percentage of network ad revenue. Google paid 77 percent of its network revenue to other sites in the most recent quarter, compared with 85 percent a year earlier. That came despite sharp competition from Yahoo, which is also bidding to sell ads for other sites.Google's profit was equal to 71 cents a share. Wall Street, however, excludes noncash charges for stock option grants and some other items from its estimates. On that basis, Google earned 92 cents a share, while analysts had expected 77 cents.Schmidt said that the warning Google issued in November, which was in a regulatory filing, had come at the suggestion of Google's lawyers and that while he expected growth to slow eventually, that was not happening now.Still, he said, the most recent quarter exceeded his expectations."We expected a good quarter," he said, "and it turned out to be exceptional."Jordan Rohan, an analyst with RBC Capital Markets, said that while he had expected Google to do well overseas, he was especially surprised at the company's growth in the United States.Several market research companies have said that Yahoo is gaining on Google, but it appears that Google's share of search revenue increased."People are starting to use Google in more ways and more often than ever before," Rohan said. "They may only use Yahoo to look up specific things."Schmidt said that Google now had more advertising revenue than any other company. And indeed its revenue, after payments to other sites, was $654 million, compared with $618 million in the fourth quarter for Yahoo, the previous leader. Google did not make any forecasts of future sales and earnings, which left analysts struggling to figure out how to adjust their own projections. Rohan, who has not finished adjusting his forecast, said that his estimates for sales and profit would be increasing and that he expected Google's share price to rise.Schmidt said one priority for Google would be the personalization of a search, taking advantage of information about the interests and attributes of each user to present better results. This has been a focus of Yahoo, which has a much bigger database on individual users than does Google."Our priority is to have more information, delivered more personally, more globally, with more targeting of who the end users are and what they are looking for," Schmidt said.
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