Google misses earnings expectations

Search maverick Google missed widely on Wall Street's earnings expectations for the quarter ended Sept. 30, 2004, its first quarterly financial report after launching its initial public offering.

Net income came in at US$52 million, or US$0.19 per share, compared with US$20.4 million, or US$0.08 per share, in 2003's third quarter. Net income before certain non-recurring items was US$125 million or US$0.45 per share, significantly below the US$0.56 per share consensus expectation from analysts polled by Thomson First Call.

Google reported Thursday US$805.9 million in revenue in 2004's third quarter, an increase of 105 percent over the same quarter last year. Excluding traffic acquisition costs (TACs), which is revenue Google pays to its partners, revenue came in at US$503 million, exceeding analysts' expectation of US$456 million.

Google's stock (GOOG) started trading on Aug. 19 on the Nasdaq Exchange. Since then, the lowest price for the stock has been US$95.96 and the highest US$152.40. Its IPO price was US$85.

Google, based in Mountain View, California, and founded in 1998, generates most of its revenue from selling online ads that it serves up on its site and on the sites of companies in its ad network. The text ads are matched via relevant keywords to the content of pages or to search engine queries, so that an ad for basketballs would be tied to a page that mentions the term and would appear alongside relevant search results. These ads are commonly referred to as sponsored search ads.

Google, which gained prominence as the most widely used Internet search engine, has been expanding its reach both inside and outside the search market. In the search market, Google has launched special services and products, such as its recently announced desktop search application, its intranet search appliance, its Froogle comparison shopping service and Google Local service for narrowing Internet searches to a geographic area.

Google is also actively reaching outside the search space. In July, it bought Picasa, which makes software for organizing and managing digital photos and runs a peer-to-peer network for sharing digital photos. In April, it announced a Web mail service called Gmail, which is still in test mode. Last year, it acquired the Blogger Web log service when it bought Pyra Labs. Recently, rumors have swirled that Google might be developing a Web browser and an instant messaging service.

Industry observers have pointed out that Google needs to broaden its scope to diversify its revenue stream and be in a better position to compete against rivals such as Yahoo, America Online and Microsoft. All three are moving aggressively to increase their share of the fast-growing and profitable sponsored search space.

In the second quarter, overall Internet ad spending was about US$2.37 billion, a 42.7 percent increase over same period in 2003, according to a report issued in September by the Internet Advertising Bureau and Pricewaterhousecoopers LLP. Search-related ads were the largest category with US$947 million, according to the report. Display ads followed in a distant second place with US$474 million. Classifieds came in third with US$403 million.

Although AOL uses Google technology to power its own Internet search service, Yahoo uses its own technology and Microsoft is developing its own technology as well. At the same time, AOL, Microsoft and Yahoo have online offerings that Google doesn't have, such as instant messaging services, and have had other online offerings longer than Google, such as Web mail services.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Juan Carlos Perez

IDG News Service
Show Comments

Cool Tech

Toys for Boys

Family Friendly

Stocking Stuffer

SmartLens - Clip on Phone Camera Lens Set of 3

Learn more >

Christmas Gift Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?