Google: More Low Blows

July 18, 2008

The economy is sinking. Most companies are trying to cut costs and boost profitability or just stay out of the red. Google has been taking some low blows in the wake of its 2nd quarter 2008 revenue report. Stephen Shankland “Live Blog: Google Roses Loses Bloom Again” provides a good summary of what’s right and what’s wrong for Google with its financial results. You can read his essay here.

The best way to summarize what Google did is to show you this chart, which was included with Mr. Shankland’s essay:

google 2nd quarter rev 08

The gross revenues are rising. The profit was $1.25 but less than the Wall Street mavens wanted. The result is that Google gets sucker punched.

You can find dozens of stories on this theme on news aggregation services.

My view is that Google is no longer the under dog. No matter what the company does, Google will be punched, kicked, and jabbed. As Google grows larger, the zippy percentage gains in previous years are harder to replicate. The GOOG is closing in on $20 billion in annual revenue.

Largely ignored is Google’s ability to tweak payouts for AdSense. None of the folks covering Google has talked with large AdSense customers about their smaller Google checks in the run up to this quarter. But I think Googzilla can withstand the abuse and no one is likely to probe how Google can twiddle the knobs to hit whatever numbers it wants to hit.

Stephen Arnold, July 18, 2008


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