Google's second-quarter profit more than doubled

[qwestcommunications]

More to follow soon.

[Velocity]

And while its rivals, Yahoo, Microsoft, etc. are posting decline or very little profit, Google's profit more than doubled compared to the last year's quarter. This is really amazing, and it looks like Google will remain #1 for a very long time.

http://biz.yahoo.com/ap/060720/earns_google.html?.v=4

[qwestcommunications]

Google earned $2.49 a share against expectations for $2.22. It seems Google distributed around $770 million to its partners in the last quarter.

[qwestcommunications]

Share are falling after hours. Looks like the shareholder wanted even higher figures. Some have accused Google of reducing distribution to its partners jsut before closing out a previous quarter to boost its profit. I think thats just nonsense.

[digitome]

WOW, simply amazing

[qwestcommunications]

Well, it looks like the shareholders were happy with the results afterall, so they should be. They are up 5% now.

[Hammy]

It's like Google has a magic crystal ball that helps them keep ahead of the game. Good for them, I guess.

[CalGuy]

Google shares down 3%. You know the old saying "Buy the rumor, sell the news"

[msweiger]

I don't suppose most of you subscribe to the Wall Street Journal, so here is the story from them, without the subscription. It is interesting to read between the lines regarding the numbers. It mentions some numbers that both include and exclude the amount paid to marketing partners, ie, Adsense (aka welfare for webmasters):

Google's Profit Doubles
On Online-Ad Demand

By MYLENE MANGALINDAN, Wall Street Journal
July 20, 2006 6:45 p.m.

Google Inc.'s second-quarter profit doubled and revenue soared 77%, an indication that the Web search company is gaining market share and controlling its costs as more advertisers shift their spending to the Internet from traditional media.

The results, which sent Google shares up more than 1% in after-hours trading, contrast with that of rival Yahoo Inc. earlier this week. On Tuesday, Yahoo said it would delay some improvements to its search-advertising system, an announcement that sent Yahoo's shares down 22% on Wednesday.

For months, Google has been walking a fine line trying to meet outsized Wall Street's earnings expectations while ramping up spending to accommodate its ambitious global and technology expansion plans. Wall Street and Silicon Valley companies have been looking for a turning point at which the company will show signs of slowing revenue and profit growth, but that point doesn't yet appear to have come.

In the latest quarter, analyst Safa Rashtchy of Piper Jaffray & Co. said Google not only was able to control its expenses, but it appears to be gaining market share against rivals such as Yahoo and Microsoft Corp. "This is one of the best outcomes we could have for Google" in what is considered a slow quarter, he said.

Google's expenses, particularly capital expenditures, have been rising as the company invests in computers, networking equipment and facilities to maintain its competitive and technological edge. Google's expenses rose 81% to $1.64 billion in the quarter from a year ago, in line with analysts' expectations and previous quarters. Meanwhile, the company's total costs in the first quarter rose 86% from a year ago, and last year's fourth-quarter costs rose 85% from a year earlier.

Capital expenditures in the second quarter were $699 million, including $319 million related to real-estate purchases. The company said it expects its growth rate for capital expenditures this year will be "substantially greater" than its revenue growth rate for 2006.

Net income was $721.1 million, or $2.33 a share, compared with $342.8 million, or $1.19 a share, a year ago. Excluding certain stock-based compensation and other factors, Google earned $2.49 a share compared to analysts' forecast of $2.22, according to Thomson First Call.

Revenue rose to $2.46 billion from $1.38 billion. Excluding commissions paid to marketing partners, revenue was $1.67 billion, above analysts' expectations of $1.645 billion.

Google reported results after the close of the market. At 4 p.m. in Nasdaq composite trading, the stock was at $387.12, down $11.88. Shares rose to $390.14 in after hours trading.

Google continues to outpace Yahoo and Microsoft Corp. in the search-technology market world-wide. In the U.S., Google's share of Web search rose to about 48% in the second quarter through May. That compared to Yahoo's 31% share and Microsoft's 14%, which were flat and down respectively from the first quarter, according to investment research firm Majestic Research Corp.

Google co-founder Sergey Brin attributed the U.S. market share gain to improvements in the relevance of the company's search service and its ease of use.

Many analysts consider Google's search-advertising system to be superior to rivals because it delivers more relevant advertising results, allowing Google to generate more revenue from those ads. Both Yahoo and Microsoft are investing heavily to develop search-advertising systems to compete with Google's, but have struggled to match Google's technology, say some analysts.

In a conference call, Google Chief Executive Eric Schmidt said partnerships remain important as a way to increase Google's reach and distribution into different markets and areas. Company executives said Google's partnership with Time Warner Inc.'s America Online unit, for instance, is on track. Under that deal, which was signed last December, Google agreed to invest in AOL and AOL agreed to use Google's search technology, with both sharing revenue from search advertising.

Mark

[mdvaldosta]

Shoulda bought stock...

[emil2k]

Can someone explain something to me about stocks, do you only make money when you sell the stock or do you get somesort of monthly piece of the profits or something?

Is $2.33 return for a quarter, really that good?

Emil

[mdvaldosta]

You get recurring revenue by holding the stocks, but most people make money buying and selling rather than holding them. As a stockholder you essentially own part of that company, therefore are entitled to part of the earnings.

[emil2k]

So is $2.33/share good?
When you sell do you sell back to the company or you must find a buyer to buy it?

Emil

[ExoticCarSite.com]

Originally Posted by mdvaldosta

Shoulda bought stock...

Just what I was thinking.....

[jimkarter]

Revenue rose to $2.46 billion from $1.38 billion. Excluding commissions paid to marketing partners, revenue was $1.67 billion, above analysts' expectations of $1.645 billion.

Total Revenue: $2.46 billion
Revene Excluding Comissions Paid: $1.67 billion

Means revenue paid was around $0.79 billion which is around 32.11% of total revenue.

Does that mean google pays 32% commission of the revenue it gets or am I missing something?

[jackburton2006]

Originally Posted by mdvaldosta

Shoulda bought stock...

Funny, I was just watching "Frequency", and in the movie this guy talks to a kid from the past (he's in the future) and he tells the kid to remember the word "Yahoo!", and the guy grows up and buys Yahoo stocks and becomes a millionaire. Shows you how long ago that movie was.

[msmp3]

I got to see that movie @jackburton .

They are earning a lot indeed; also from Adsense

[Bogo]

You only make money from a stock if
a) you sell it
or
b) the company pays dividends.

Most companies don't pay dividends (meaning they keep the cash they've made and use it to expand the company). Some of these companies have stock buyback programs, which use the cash to buy back open-market stock at a premium, raising the value of all of its stock (since there is less of it).

$2.33 in a vacuum doesn't mean anything - it all depends on the niche market, the cost of the share, the cost of other shares, the earnings of other shares, growth, etc. etc. etc.

[Joe Blow]

Originally Posted by emil2k

Can someone explain something to me about stocks, do you only make money when you sell the stock or do you get somesort of monthly piece of the profits or something?

Is $2.33 return for a quarter, really that good?

Emil

Emil, if you're interested in learning about the stockmarket, check out my stockmarket forum. There are a couple of threads on Google in the International Markets forum: http://www.aussiestockforums.com