Google issued its Q4 07 earnings report today showing a 51% rise in revenues and a 17% increase in net income, year-over-year. But after-hours trading sent the company's stock south because those increases did not meet Wall Street's expectations.
Revenue for the search giant advanced to $4.8 billion during the quarter, while net income climbed to $1.2 billion. A slow-down in click-through growth hadn't been factored into the analysts' models. Paid clicks grew 30% year-over-year but Wall Street had been banking on the historical 50% growth rate in this key metric.
What I find most interesting about Google is that the mountain of cash the company sits on just keeps growing and growing, even as operating expenses and capital expenditures soar. Free cash flow (the money left over after all costs, including capital expenditures) more than doubled from year-end 2006 to year-end 2007, when Google generated $1.1 billion in left-over money in the bank.
The free cash mounted even as operating expenses jumped by 58% and capital expenditures surged by 85%. By year-end 2007, Google had $14.2 billion in cash and marketable securities, $3 billion more than it started with at the beginning of the year. Assuming Google is the winner of the C block 700 MHz bidding, the company could write a check to the feds for $4.7 billion and still have $10 billion left over (although Google probably wouldn't take such a big bite out of cash to pay for the spectrum).
Wall Street, however, cares almost solely about future growth and Google's revenue growth engine is cooling slightly. During the fourth quarter of the year, typically Google's strongest period of growth, Google's revenues rose by 14% sequentially in comparison to the 19% rise in Q4 07 and the 22% rise in Q4 05.
During the company's earnings call, Google execs said that the international market might goose Google's growth, with more than half of the company's search traffic gains flowing from overseas.
Posted by Cynthia Brumfield at 7:19 PM | Print | Comments (0)One bit of drama surrounding the 700 MHz spectrum auctions has died down. The C Block spectrum has hit its reserve price of $4.7 billion, meaning that someone -- and we don't yet know which company is involved -- will be offering mobile services on an open access basis.
The FCC, after a public controversy involving Google and top incumbent carriers, has required winning bidders for this spectrum to provide services on any technically qualified handset and to permit third-party applications to run over the network. But, that requirement only comes into play if the reserve price, the floor, for this spectrum hits $4.7 billion.
Because the actual bidders aren't know to the public yet, it's hard to say which company bid the $4.7 billion. But speculation centers on Google, the major impetus behind the open access requirements, and Verizon Wireless.
The total bid to date for all the licenses is $12.8 billion, surpassing the $10 billion threshold that the FCC promised the auctions would contribute to the U.S. Treasury.
The auction results are not all good news. So far, only one bidder has emerged for the public safety portion of the spectrum, the D block set of frequencies.
Posted by Cynthia Brumfield at 11:39 AM | Print | Comments (0)Patrick Ruffini has this interesting item that tentatively proclaims that as far as politics is concerned, "2008 could be the year of Twitter in the way that 2007 was the Year of Facebook and 2006 was the Year of YouTube." To illustrate the lure of Twitter for political junkies, he cites the crashing of Twitter by live reactions during Monday's State of the Union speech.
It seems to me, based on my limited experience, that Twitter crashes more or less at random, so Ruffini's example may or may not prove the political power of Twitter. A more compelling argument that presages a big role for Twitter in politics is something else Ruffini says. He claims "it's the first place I turn to if I need a quick question answered, and for raw political intelligence."
Ruffini is not a journalist per se. He's a political strategist and blogger. But, he's part of a growing trend of journalists and opinion leaders who turn to Twitter to gather or disseminate information. The tweets from these "elites," which include John Dickerson from Slate, Ann Marie Cox from Time and Mark Ambinder from The Atlantic, are starting to shape media coverage of politics and are really interesting (particularly Dickerson's reports from New Hampshire, punctuated as they were with complaints of cold weather, boring drives and bad food.)
This "microjournalism" is really something new and I'd wager that within six months, most journalists, political or not, will be twittering away.
I must admit that I joined Twitter expecting it to be an annoyance, at best. Twitter and other microblogging platforms are the vehicles through which many users relay the most prosaic and mind-numbing details of their days, such as "going to bed," "watching TV," "coaching soccer."
At the other end of the spectrum are incomprehensible discussions among Twitter users that, while intriguing, are often incomplete because you're not following everybody in the conversation.
In the middle, however, is great stuff, such as breaking news (California wildfires, Obama's victory in Iowa) and invaluable leads. In fact, I was lead to Ruffini's piece because I follow Mathew Ingram. A growing number of articles I read come through Tweet links or blogs that I follow through Twitter.
It's also fascinating to read the crush of Tweets that come through on big nights, such as the last Democratic debate on CNN. I don't follow that many Twitter feeds but the Twitterers I do follow were alive with chatter that night and I read the ongoing flow of reactions with appreciation. It was like a political water cooler
This form of communication is also something new. Before Twitter, this kind of conversational-style text communication existed in the form of IMs, but IMs are limited in their reach. With Twitter, you can eavesdrop (as I mostly do) or join conversations with many people at once. And that is a powerful political tool.
Posted by Cynthia Brumfield at 8:03 AM | Print | Comments (0)
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