Date: 16th October 2008
Hail Google! Wall Street is crumbling and traditional media companies are struggling to survive. But Internet bellwether Google — the king of search — beat analysts' expectations today and posted solid earnings: $1.35 billion in revenue for the quarter. That's up 31% from a year ago.
You can get all the details here. But the bottom line is very strong — and very clearly shows how solid, diversified and growing Google is. And what about the future in this cataclysm of an economy? While CEO Eric Schmidt was characteristically measured and calm ("While we are realistic about the poor state of the global economy, we will continue to manage Google for the long term...") it looks like Google will emerge from Great Depression 2.0 bigger and stronger than ever.
Spend some time with the balance sheet, and listen to Google's top execs — who jackjawed over an hour with analysts after the market closed today — and you can't help being a believer. If any company other than Budweiser is recession/depression proof, this could be it.
That's because it starts with consumers, who will continue to use Google more than ever. In tough times, everyone looks for value, and what's more valuable than something you get for nothing? Google's search, maps, email and documents improve at an astounding rate, and the company continues to invest in making those products ever better, drawing in more users at home and work.
As the mobile revolution continues — and it will continue since mobile telephones are almost as likely to survive home-budget cuts as cable TV — who stands to gain more market share than Google? Mobile search queries are just starting to explode, said Schmidt. Though he declined to give numbers, he said: "the compound growth rate is one of the fastest-growing things in the company." That's a pretty big statement at Google. And remember that we're at the earliest stages of this particular revolution. The first Google phone is just coming to market after all.
On the advertising front, the company continues to win over the hearts and minds of advertisers and users. While AdWords (in which relevant ads are matched to search queries) was the company's first eureka moment, it is expanding in many other directions, from trying to monetize videos on YouTube, to a new, roll-your-own display ad program that launched today. "We see a lot of opportunities in display," said co-founder Sergey Brin, who cautioned that, as with many things Google, the program might take some time to find its way. "Let's not forget that when we first got started on AdWords it took us a number of years for it to even catch up with the big numbers of display advertising." But he vowed that the display ad program, as it matured, would scientifically target the right ad to the right user at the right time, giving advertisers valuable data about what was working, and what wasn't.
Hal Varian, Google's chief economist, said that the current economic climate, rather than hurting Google, could well help it. "When there is a recessionary period, people are counting their pennies and looking for bargains," he said, noting that at Google, this is known as "the Wal-Mart Effect." He added: "We think this kind of effect could actually work to Google's benefit." Indeed, it could work better at Google, where everything is free, than at Wal-Mart.
By Josh Quittner / San Francisco
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