All Eyes on Google
Investors question growth amid economic slump.
Most companies would kill for that sort of expansion given current economic conditions, but Google's growth clip is off significantly from previous levels. First quarter earnings in 2007 were a whopping 60.6% higher than 2006 numbers, which were almost twice that of 2005.
According to the company, Google generates 44% of its revenue from overseas. Investors should welcome this trend, as online growth rates begin to cool in the U.S. Abroad, however, Internet use is still expanding rapidly.
In recent months, much has been made about Google's relative susceptibility to the continuing economic slowdown. The company doesn't provide formal earnings guidance, and according to The Wall Street Journal analysts rely heavily on data compiled by ComScore, a compiler of online clicking habits. On Tuesday, ComScore reported that, compared to the fourth quarter of last year, first quarter clicks on Google search ads declined 9.3%.
Some investors fear Google has saturated its primary market -- online search --- and is now more exposed to oscillations in economic activity. Small and medium-sized businesses are already scaling back advertising campaigns, eating into Google's bottom line. CEO Eric Schmidt maintains his company's results aren't closely tied to greater economic strength or weakness. Meanwhile, skeptics accuse the company of failing to generate revenue from its forays into other markets, like online document sharing, email and word processing applications.
Google's challenge will be to find ways to grow during challenging economic times, especially if Microsoft (MSFT) ends up succeeding in its attempt to swallow Yahoo (YHOO). Google best gear up for a fight.
The information on this website solely reflects the analysis of or opin=
=3D =3D3D ion about the performance of securities and financial markets by =
the wr=3D iter=3D3D s whose articles appear on the site. The views expresse=
d by the wri=3D ters are=3D3D not necessarily the views of Minyanville Medi=
a, Inc. or members=3D of its man=3D3D agement. Nothing contained on the web=
site is intended to con=3D stitute a recom=3D3D mendation or advice address=
ed to an individual investor =3D or category of inve=3D3D stors to purchase=
, sell or hold any security, or to =3D take any action with re=3D3D spect t=
o the prospective movement of the securit=3D ies markets or to solicit t=3D=
3D he purchase or sale of any security. Any inv=3D estment decisions must b=
e made =3D3D by the reader either individually or in =3D consultation with =
his or her invest=3D3D ment professional. Minyanville write=3D rs and staff=
may trade or hold position=3D3D s in securities that are discuss=3D ed in =
articles appearing on the website. Wr=3D3D iters of articles are requir=3D =
ed to disclose whether they have a position in =3D3D any stock or fund disc=
us=3D sed in an article, but are not permitted to disclos=3D3D e the size o=
r direct=3D ion of the position. Nothing on this website is intende=3D3D d =
to solicit bus=3D iness of any kind for a writer's business or fund. Mi=
ny=3D3D anville mana=3D gement and staff as well as contributing writers wi=
ll not respo=3D3D nd to em=3D ails or other communications requesting inves=
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter