Google rakes in the greenbacks... again
01-02-2007
by Emmet Ryan

Google once again hammered analysts' expectations when it announced its fourth quarter and year-end results on Thursday.

The internet giant posted profits of USD1.03 billion dollars for the quarter ending 31 December, representing earnings per share (EPS) of USD3.29 -- nearly trebling its performance for the same period in 2005 when it had profits of USD372 million and EPS of USD1.22.

The Californian firm, which employs around 800 people at its European headquarters in Dublin, has so far beaten analysts' targets for nine of the ten financial quarters it has traded as a public company.

After stock-based compensation charges and other adjustments the company had net profits of USD997 million. This figure translates to an adjusted EPS of USD3.18, surpassing analysts' expectations of USD2.91.

Google had revenues of USD3.21 billion for the quarter, up a huge 67 percent on the same period in 2005, and up 19 percent from the third quarter of 2006. International revenues contributed 44 percent in the quarter, matching the performance in the third quarter.

Google-owned sites generated revenues of USD1.98 billion. This represents an 80 percent increase over fourth quarter 2005 revenues of USD1.10 billion. Google's partner sites generated revenues of USD1.20 billion. This is a 50 percent increase on the USD799 million generated in the same period in 2005.

Traffic acquisition costs (TAC), the portion of revenues Google shares with its partner sites, increased to USD976 million in the fourth quarter. This compares to TAC of USD825 million in the third quarter. TAC as a percentage of advertising revenues was 31 percent in both the fourth quarter and the third quarter.

Between both Google-owned and partner sites, the total of paid clicks related to advertisements increased by 61 percent over the same period in 2005.

"Our impressive performance in the fourth quarter demonstrates the continuing strength of our business model across Google properties and those of our partners," said Eric Schmidt, chief executive of Google. "Our growing organisation allows us to deliver ever increasing amounts of information and content to our users both through investments in search and ads, as well as through strategic partnerships."

Despite the healthy results Wall Street gave a tepid response to the figures. The fact that Google has hit the jackpot in terms of healthy profit surges nine times out of ten could be the reason for this -- it's just not particularly exciting news for the Wall Street money men any more. Shares in Google fell USD3.76 to USD497.50 in after hours trading. They had risen USD7.18 to USD501.50 earlier in the day on the NASDAQ.