Feeds

Wall Street frowns on ginormous Google profits

Sergey grabs the knob

Build a business case: developing custom apps

Google's ginormous second quarter profits didn't quite match Wall Street expectations, driving share prices down as much as 7 per cent in after hours trading. But it sounds like Sergey Brin will soon crank that big dial on the company's secret money machine, making everything A-OK in Q3.

In Q2, the world's largest ad broker nabbed revenues of $5.37bn, a 39 per cent leap from the same quarter last year and 3 per cent climb from Q1. "We're obviously very pleased with what we believe are good results in one of the weaker quarters in our normal yearly cycle," CEO Eric Schmidt said, during a conference call with reporters and industry analysts - in his usual haughty monotone. "Traffic and revenue was strong across all regions and verticals...despite uncertain economic conditions."

Meanwhile, profits hit $1.25bn. That's a 35 per cent jump from the same quarter last year, but it's a slight dip from Q1 - and it wasn't enough to satisfy the financial guess men. Google delivered $4.63 a share in earnings, and all those dart-tossing Wall Streeters predicted $4.74.

Lameduck CFO George Reyes indicated that some dollars were lost because of Google's "continued focus on delivering high quality traffic to advertisers." Paid click rate continues to decelerate, but Google has always said this is part of a grand scheme to improve the "relevance" of its online ads. In Q2, total paid clicks - across Google-owned sites as well as its content network - grew 19 per cent from last year, but they dropped slightly from Q1.

At the same time, the company says, ad "coverage" has dropped over the last few quarters, meaning fewer and fewer ads are being shown. "This is our continued focus on quality, and I don't see that changing significantly," said senior vice president for product management Jonathan Rosenberg. "[Co-founder] Larry [Page] often says we'd be better off showing just one ad [per page] - the perfect ad."

But Rosenberg was quickly contradicted by Sergey Brin, co-founder number two. "There is some evidence that we've been a little bit more aggressive in decreasing coverage than we ought to have been," Brin said. "We've been reexamining some of that."

Of course, like Rosenberg, Brin said he's merely interested in keeping web users satisfied. "Our ads are an important addition, quality wise, to our pages. They're a very important source of information." But we all know that Google is long way from displaying nothing but "relevant" ads on every page. We all know that more coverage means more money. And you can bet that next quarter, Sergey will make sure those Wall Street guess men get exactly what they want. ®

Build a business case: developing custom apps

More from The Register

next story
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Nintend-OH NO! Sorry, Mario – your profits are in another castle
Red-hatted mascot, red-colored logo, red-stained finance books
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.