Google says it has plenty of ways to make money

Dakait Banned

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Google says it has plenty of ways to make money
Officials tell Wall Street analysts not to fret about growth

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/03/03/GOOGLE.TMP&type=business

Google says it has plenty of ways to make money
Officials tell Wall Street analysts not to fret about growth
Verne Kopytoff, Chronicle Staff Writer

Friday, March 3, 2006

Google Inc. painted an optimistic picture of its future at an annual analyst meeting Thursday, trying to combat investors' fears that the company's torrid growth is slowing down.

In the process, the Mountain View Internet giant gave a little ground in its battle with Wall Street regarding how much financial information the company releases.

It all happened at Google's annual analyst day, where executives hosted Wall Street's researchers and repeatedly emphasized the potential for adding revenue through its international Web sites, by enticing more users to click on ads more often and by introducing new products. They also detailed the company's efforts to expand into offline advertising, such as radio, print and television, and maybe even direct mail.

If so, it would mean Google would operate in a market of up to $800 billion, according to Chief Executive Officer Eric Schmidt. Just getting a small percentage would be a considerable boost to the company's business.

"The size of this market is so much larger than anything we thought," Schmidt said.

Google, like most companies, used its analyst day, held at its Mountain View headquarters, to pat itself on the back in front of the investment community.

Google's shares, which have been on an uncharacteristic downward spiral recently, rose in trading Thursday. At the closing bell, they were up $11.65 to $376.45, a gain of 3.2 percent.

Earlier this week, George Reyes, Google's chief financial officer, spooked investors when he said at a conference that the company's growth is slowing. Although many analysts said he was only stating the obvious, the market reacted with a one-day sell-off.

The new financial information that Google released, which does not follow generally accepted accounting rules, included operating income, operating expense and cash flow for every quarter in 2004 and 2005. The data are particularly important to investors for forecasting Google's future performance because the company has a policy against providing its own forecasts, bucking Wall Street tradition.

Despite the hat-tip to openness, Google's executives repeatedly declined to answer specific questions posed by analysts Thursday about the business. Executives mostly spoke in generalities, without discussing any future Internet products, key users or advertising levels.

Sergey Brin, Google's co-founder, addressed the recent criticism of the introduction of a censored search engine in China in compliance with the Beijing government's demands. He reiterated the company's argument that it is better to provide a limited amount of information to users there than none at all.

By not being in China, the company would be "not only hurting ourselves but the Chinese people," Brin said, citing his own childhood in Soviet-era Moscow.

Schmidt teased the analysts with the possibility that Google may eventually be a business with $100 billion in annual revenue, more than 15 times what it is now. In fact, he said, one of the company's goals in 2006 is to build a $100 billion global company, refusing to say whether he was referring to revenue or the company's market capitalization, which is $111 billion.

Schmidt emphatically denied that Google is planning to take on eBay's dominant PayPal online payment system. Last week, it started allowing users to buy products on its Google Base classified service, using a Google Account payment service that can be funded with a credit card.
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Dakait, Mar 3, 2006 IP

bermudaviper Peon

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#2

Lets be honest, any company with the assets and brand name power of google can pretty much turn their hand to anything and make money as long as it's managed correctly!

bermudaviper, Mar 3, 2006 IP

Jufcy8200 Banned

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bermudaviper said:

Lets be honest, any company with the assets and brand name power of google can pretty much turn their hand to anything and make money as long as it's managed correctly!
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I'd be careful what you say...

Let's be honest - Google is a great company and their search engine dominates. BUT they are also a NEW company who's stock is wayyy over valued.

The key word in yoru statement is managed, lets hope they continue to be well managed cause if somehting ever happened a lot of people will lose a shit load of money!

Jufcy8200, Mar 3, 2006 IP

Sharpseo Peon

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#4

Good article. I definitely think Google still has plenty of room to grow. Continued international expansion is going to be huge. Froogle has big potential too, the % of internet users who know about Froogle is still really small.

Plus the possibility of a mobile operating system, related the startup they bought, Android Systems.

Even with the threat of YPN and MSN's answer to Adsense, the % of websites using PPC ads will continue to rise. There's room for a few big players.

Sharpseo, Mar 3, 2006 IP

Notting Notable Member

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#5

I believe G stock is massively overvalued. CFD sell if you wanna make big cash.

Disclaimer: Don't take my advice for gawds sake!!

Notting, Mar 3, 2006 IP

chachacallis Well-Known Member

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#6

google can only get bigger from here, they have the potential to go in to many other things.

chachacallis, Mar 4, 2006 IP

Andrewaclt Peon

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#7

Notting said:

I believe G stock is massively overvalued. CFD sell if you wanna make big cash.

Disclaimer: Don't take my advice for gawds sake!!
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While it may be slightly over valued, It will still grow until it stagnates like Microsoft stock in about 15 years from now. Google is going to continue to innovate and do exciting new things.

Andrewaclt, Mar 4, 2006 IP

brecht Peon

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#8

nice read, liked the article alot.

brecht, Mar 5, 2006 IP

initialdheaven Peon

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#9

i personally can't understand how a company can earn sooo much money JUST by selling TEXT ads....

initialdheaven, Mar 7, 2006 IP

DuncanM Well-Known Member

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#10

Well, Google just bought Writely, so it looks like they are diversifying into fields unrelated to search.

DuncanM, Mar 9, 2006 IP