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Apr-21-2008Yahoo Hopes a Solid Profit Report(topic overview)
CONTENTS:
- The stock still has a long way to go to fully recover the $75 billion in shareholder wealth that evaporated as economic worries caused Google's market value to plunge by 35 percent since December. (More...)
- "The boys came through," Mr. Gillis said yesterday. (More...)
- Revenues totaled $5.19 billion, up 42% from a year ago. (More...)
- After a better-than-expected quarterly earnings report called 'amazingly good' by the New York Times, it would seem that Google is defying macro-economic downtrend. (More...)
- Certainly Google's ( GOOG ) first-quarter earnings report made it clear that in at least some cases analysts' estimates aren't too high. (More...)
- First-quarter net income rose to $1.31 billion, or $4.12 per diluted share, from $1 billion, or $3.18 per share, a year earlier. (More...)
- The security problems are compounded by the way in which Web pages now tend to be assembled from data sources that aren't immediately transparent to Web page visitors. (More...)
- The good news sent Google shares-which had fallen 35% since the beginning of the year-surging $75 in after hours trading. (More...)
- The joint website's entire search advertising would then be handled by Google as a third-party provider. (More...)
- "Investors appear to be ignoring the strength of Microsoft's underlying fundamentals," Thill wrote Wednesday. (More...)
- Microsoft Corp., the world's largest software maker, began testing a subscription pricing model for its Office software that gives consumers upgrades to new versions over the Internet. (More...)
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The stock still has a long way to go to fully recover the $75 billion in shareholder wealth that evaporated as economic worries caused Google's market value to plunge by 35 percent since December. That left the company's shares at $449.54 at the end of Thursday's regular trading. Google's performance indicates the Internet's advertising market -- expected to generate $44 billion in worldwide spending this year -- remains robust, especially outside the United States. Powered by its popular search engine, Google has built the Internet's most lucrative ad network. Despite Google's reassuring first quarter, some analysts and investors remain cautious because so much of the company's ad revenue comes from small and midsize businesses more apt to curb their spending if the economy's woes worsen. "The fact Google hasn't seen a slowdown yet just means that there might be another shoe to drop," said Darren Chervitz, co-manager and research director for the Jacob Internet Fund, which has sold about half of its Google holdings in recent months. Google's aura of invincibility remains intact for now, much to the delight of its chairman and chief executive. "It's clear we are well positioned for 2008 and beyond, regardless of the business environment we are surrounded by," Chairman Eric Schmidt said. Schmidt and other Google executives expressed confidence that the company's ability to divine consumer interests from their online search requests to deliver relevant ads will hold its appeal even if the U.S. economy sinks into a recession. In an apparent attempt to hold down its expenses, Google also is hiring employees at a slower pace. [1] During a conference call with analysts, Google chairman chief executive, Eric Schmidt said fewer, better targeted ads had helped sustain growth. "Paid-click growth was much higher than has been speculated by third parties," he said. "In search, we continue to invest in quality, particularly internationally, and quality improvements lead to increased traffic and share," he added. Google co-founder and technology president Sergey Brin said it had rolled out 100 improvements to its core search engine during Q1. Schmidt also said the company was beginning to reap the rewards of a three-pronged strategy to develop its applications and search businesses alongside its paid-click advertising, while also restating his views outlined at the last quarter's results call that the U.S. economic downturn was having little impact. It allows us to offer a much more comprehensive solution for advertisers and publishers," said Schmidt. YouTube figured in its strategy to become "the world's largest display ad provider," according to Jonathan Rosenberg, Google senior vice president of product management. The company's Q1 results included those of the newly acquired internet advertising software company from the point when the deal closed on 11 March until the end of the period. Google said this had minimal affect on revenue and was "only slightly dilutive" to net income and earnings per share.[2]
""The boys delivered."" Shares in Google, the darling of the technology sector in 2007, saw its shares reach a peak of $741.80 in November last year, making it the fifth biggest U.S. company by market capitalisation. Since then, its shares have been hammered on worries that it faced an advertising slump amid mounting evidence that the U.S. is slipping into a recession. The California-based company makes money when internet surfers click on the paid-for-links on the right hand side of the website which takes them through to the adverts. Recent data from research firm comScore showed that fewer web searchers were viewing these, fanning fears that the company's best days were behind it. Its upbeat results suggest the reason for this reflects a deliberate reduction in the number of ads on each search results page to deliver to advertisers better matched visitors who are more likely to buy their products. Analysts say Google's strong performance could strengthen Microsoft's resolve to buy Yahoo even if it means raising its $44.6bn offer - a move that it has so far rejected.[3]
Yahoo was in second at a 21 percent share followed by Microsoft at 9 percent. Despite the challenges ahead, Google still has ample opportunities to grow as advertisers shift more of their spending to the Internet from other media like newspapers, magazines, radio and television. The Internet is expected to capture about 7 percent, or $44 billion, of the total worldwide advertising market this year. Analysts say the percentage of Internet advertising lags behind the amount of time consumers are spending online, suggesting that marketers will need to ramp up their spending even more if they want to reach potential customers. Google also has been adding more advertising vehicles to supplement its search engine. Google is starting to show more video advertising through its increasingly popular clip-sharing site, YouTube.com.[4]
"Yahoo is close to outsourcing its web search advertising to Google in a deal aimed at fending off Microsoft's $44.6 billion bid to acquire Yahoo." San Francisco -- Internet search engine Yahoo!, which remains the target of an unsolicited $44.6 billion hostile takeover bid by Microsoft, is reportedly moving closer to outsourcing its search advertising to Google Inc. as part of a two-pronged attempt to defend itself, after an initial test of the system yielded what the two firms deemed positive results, The Wall Street Journal reported, citing unnamed sources.[5] Google supplies web search advertising to partners ranging from Time Warner Inc.' s AOL and IAC InterActiveCorp's Ask.com to News Corp.' s MySpace. Google has been the subject of intense Wall Street debate over whether recent comScore data showing Google having trouble converting web searchers into ad viewers is an indication its best days of growth are behind it, or whether the company is gearing up for a new burst of growth. Paid clicks, a measure of how often users of its web search services clicked on ads tied to the results, rose four per cent from the fourth quarter of 2007 and grew 20 per cent from a year ago.[6] International revenue accounted for 51 per cent of the total, surpassing U.S. revenue for the first time and powering the company's results. Google's performance may strengthen Yahoo! Inc. in its efforts to wring a higher takeover offer from would-be buyer Microsoft Corp. "This signals that the online advertising market is still healthy, which should help Yahoo get a better price for its company if it does decide to sell to Microsoft," said Peter Dunay, chief investment strategist at broker-dealer Meridian Equity Partners. Google's traffic acquisition costs -- the cut of advertising revenue paid out to affiliated sites that run its ads -- amounted to 29 per cent of ad revenue in the first quarter.[6] Yahoo's latest rejection April 7 followed a letter from Microsoft Chief Executive Steve Ballmer two days earlier that hinted at a hostile takeover if Yahoo doesn't attempt to negotiate a sale before April 26. Yahoo seems bullish about its performance. Last month, the company took the unusual step of reaffirming its revenue forecast for the first quarter and the year. It also gave a rosy forecast for the next two years. For its first quarter, analysts expect Yahoo to report a profit of 9 cents a share. Revenue minus traffic acquisition costs -- money it pays to Web site partners that carry its ads -- should hit $1.32 billion, say analysts polled by Thomson Reuters.[7] The results out of Google, IBM and Intel are encouraging for another important reason. The mantra for tech investors this year has been to hold big-cap companies with solid fundamentals and lots of revenue coming from overseas. International operations not only help shield the company from U.S. weakness, but those revenues get a boost from the declining value of the dollar. It's a sound strategy, but with the exception of IBM it hasn't really helped anyone's share price. This week's results, however, proved the wisdom of that thesis. Intel and IBM derive a good two-thirds of their sales from overseas, while Google, for the first time in its history, generated more than half its revenue from international operations. That certainly bodes well for next week, when Microsoft ( MSFT ) reports. With the market distracted by its bid for Yahoo ( YHOO ), Citigroup analyst Brent Thill advised clients to buy Microsoft ahead of earnings.[8] According to analysts surveyed by Thomson Financial, Google is expected to report first-quarter revenue of $3.61 billion when certain payments to partners are factored out, a 6.5% increase from $3.39 billion on that basis in the fourth quarter. Google declined to comment on the comScore data or its earnings report. When it posted its fourth-quarter earnings on Jan. 31, Google CEO Eric Schmidt said the company hadn't seen any impact from macroeconomic softening. In public comments since then, Google executives have said it isn't clear yet whether those problems will hurt its business. Since going public in 2004, Google has sworn off giving any detailed public earnings guidance, which increases the difficulty of assessing any risks to its performance. That's a major reason investors turn to comScore's search-ad click data, despite analysts' warnings that the data haven't always predicted Google's results reliably in the past. "The comScore click data has been a huge focus for the investment community and probably has been one of the bigger influences on the stock this quarter," says John Aiken, managing director of Majestic Research in New York.[9] Los Angeles, California. "It's clear to us that we're well positioned for 2008 and beyond, regardless of the business environment that we find ourselves surrounded by," chairman and chief exec Eric Schmidt told Wall Street analysts in a Thursday afternoon conference call. Google issued its earnings report after the stock market closed, and the company's stock promptly shot up in after-hours trading, passing the $500 mark for the first time since February. It had been trading at $449.54 when the market closed. The Netco also reported that international revenue now brings in more than half of its total coin, accounting for $2.65 billion, or 51%, compared to 47% in the year-earlier period.[10] Google's stock soared by nearly $80--more than 17%--in after-hours trading after the search giant delivered first-quarter results for revenues, paid-click growth and earnings that exceeded Wall Street's expectations. "It's clear to us that we're well-positioned to thrive, regardless of the business conditions that surround us," said Google CEO Eric Schmidt, shrugging off concerns about a sluggish U.S. economy.[11]
The financial targets that guide Wall Street's expectations had fallen during the past two months as Web-surfing data convinced analysts that fewer people have been clicking on Google's links to advertising amid mounting evidence the U.S. economy had tumbled into a recession. Google makes money from the links only when Web surfers click on them. At least 10 analysts had lowered their forecast for the first quarter and for the full fiscal year of 2008. Google's shares have fallen 35 percent since the beginning of the year, wiping out about $75 billion of its market value.[12] Google's revenues were up 42% last quarter. The pockets of Google founders Sergey Brin and Larry Page will be feeling a bit fatter this morning, after another huge jump in profits sent the search giant's share price soaring again. Google said that its profits surged 30% to $1.3bn in the first quarter of this year, with revenues up 42% to $5.2bn. Both figures were well above expectations, despite gloomy Wall Street predictions that a slowdown in online advertising would take a big bite out of the figures.[13] Google has announced first quarter profits which have exceeded expectations, despite concerns that it has been facing a slowdown in advertising revenue. The search engine giant has been experiencing difficulties recently, with a 50 per cent increase in its shares last year being wiped out since the beginning of 2008.[14]
The Internet search leader said it earned $1.31 billion, or $4.12 per share, during the first three months of the year. That represented a 30 per cent increase from net income of $1 billion, or $3.18 per share, in the first quarter of 2007. If not for expenses to cover stock given its employees, Google said it would have made $4.84 per share. That figure outstripped the average projection of $4.52 per share among analysts surveyed by Thomson Financial.[15] The company's quarterly tax rate ranged from 25 per cent to 27 per cent last year. Management attributed this year's lower rate primarily to its widening exposure to markets outside the United States. The results restored some of the $75 billion in shareholder wealth that had evaporated with the 35 per cent drop in Google's stock price this year. Google shares declined $5.49 during regular trading to finish at $449.54 before the company released its pleasant surprise. This was the 12th quarter out of the 15 since Google went public that its performance has topped analyst expectations -- a trend that had helped propel its stock to nearly $750 before the recent plunge.[15]
The company generated $5.19 billion ('2.6 billion) revenue in the period ending 31 March and net income of $1.31 billion ('658 million) or $4.12 ('2.07) per share, compared with $1 billion ('503 million), or $3.18 ('1.60) per share, in Q1 2007. Financial analyst Thomson Financial had forecast revenue of $3.608 billion ('1.8 billion), excluding the advertising commission paid to websites that run its ads. Google beat this forecast, reporting $3.7 billion ('1.86 billion) in equivalent revenue. Despite some doubts over its ability to continue to grow revenues through its pay-per-click advertising in the face of growing competition from the likes of Yahoo, Google said this part of its business grew 20 per cent year-on-year.[2] Google CEO Eric Schmidt even went as far as to say the company''would still perform well for the whole year''"regardless of the business environment."'' For investors, the results wiped away fears that Google was just as vulnerable as any company to recession fears and, as of this morning, company shares were up more than $80. Some analysts noted that''Google growth slowed from the previous quarter and that the good results did not completely eliminate concerns about its prospects (New York Times). While Lehman and Merrill Lynch''rushed to see who could raise their price targets for Google higher, shares of comScore ''quietly fell 8 percent.'' Schmidt gave less satisfaction in his comments on the company's dealings with arch-rival Yahoo, but his tone was sweet: "It's nice working with Yahoo and we like them very much."[16] After subtracting the commissions paid to the company's advertising partners, Google's revenue stood at $3.7 billion -- about $100 million above analyst estimates. "It's clear we are well positioned for 2008 and beyond, regardless of the business environment we are surrounded by," Google Chief Executive Eric Schmidt told analysts during a Thursday conference call. Some analysts and investors, though, remain cautious because so much of Google's ad revenue comes from small and mid-sized businesses, which are more apt to curb their spending if the economy worsens. "The fact Google hasn't seen a slowdown yet just means that there might be another shoe to drop," said Darren Chervitz, co-manager and research director for the Jacob Internet Fund, which has sold about half of its Google holdings in recent months.[15] The first quarter represented a tipping point in Google's maturation into an international company that's becoming less vulnerable to the ups and downs of the U.S. economy. Google collected most of its first-quarter revenue outside the United States, the first time that has happened in the company's 9 1/2-year history. Besides diversifying its business, the higher international revenue should also help boost Google's profit because it should keep company's tax rate slightly lower than it has been in past years. Google Chief Executive Eric Schmidt left little doubt he expects the company to prosper as he hailed the first quarter results. "It's clear we are well positioned for 2008 and beyond, regardless of the business environment we are surrounded by," Schmidt told analysts.[4] For instance, Google's first-quarter revenue climbed 42 percent. That's impressive, but well below the 63 percent growth in 2007's first quarter. Google's profits could be squeezed later this year if it has to spend more money to upgrade the data centers that power its search engine and other online services like e-mail, said Collins Stewart analyst Sandeep Aggarwal. He said he thinks additional investments probably will be needed, given some of the data centers are three or four years old.[4] Mr. Aiken says large search buyers are spending the same or more, and ad firms that work with large advertisers support that idea. "We don't really have any instances where we're seeing clients pull back their search ads," says Steve Governale, senior vice president and managing director of SMG Search, a unit of Starcom MediaVest, itself a unit of Publicis Groupe. If anything, big advertisers are shifting dollars to search ads because it can be easier to measure the revenue generated by them than it is for ads like glossy magazine spreads, some ad executives say. Some analysts say ad spending is dropping in some industry areas most affected by economic problems, such as financial services. Spending by advertisers in the financial, travel and retail areas declined or grew more slowly in the fourth quarter, compared with a year earlier, Yahoo President Susan Decker told analysts in January, though she said that overall the company had seen "a solid start to the year." It remains unclear how online advertising beyond search is affected by any consumer slowdown. Search advertising is the largest category of U.S. online ad spending, expected to account for 40% this year, according to research firm eMarketer Inc. Other forms of online advertising, such as graphic display ads and video ads, are generally priced using different models than per-user clicks. EMarketer last month reduced its 2008 forecast for U.S. online spending because of concerns about the softening economy.[9] Just what kind of hand Yahoo is holding is unknown. A year-over-year increase in revenue could mean Yahoo is having some success with its display and search ad businesses. Garrity says the expected dip in profit likely comes from work the company has been doing to bring its display and search ad businesses to one platform to give better access to advertisers. "It indicates margin pressure, and they had already indicated that was happening," Garrity said, referring to Yahoo's reaffirmation of its first-quarter numbers last month. Revenue and costs might rise, says Squali, as Yahoo integrates recent acquisitions such as Blue Lithium, a service that allows advertisers to reach more targeted audiences, and Right Media, an online ad exchange that matches ads with space on Web properties. "We think you are going to see year-over-year double-digit growth in display advertising," Squali said, "because those businesses were not part of their business model in Q1 '07. Their operating expenses have gotten bloated because these acquisitions are not as profitable as Yahoo, so that brings down the margins." Analysts say Yahoo will also reap some revenue boost from its revamped Web search ad business, known as Panama.[7]
When it reports first-quarter results on Tuesday, Yahoo has perhaps a last chance to demonstrate some financial strength and progress it has made in stabilizing the company's Internet media and advertising business after two years of decline. Mid-week, Yahoo is set to complete a test with Google Inc (GOOG.O: Quote, Profile, Research ) on whether Google should run a piece of its Web search ad sales, a move sources familiar with the talks say is part of a plan to merge with Time Warner's (TWX.N: Quote, Profile, Research ) AOL and fend off Microsoft.[17] Google's first-quarter showing could foreshadow a strong earnings report from Yahoo Inc. next week. If it can meet or exceed analyst expectations like Google did, Yahoo will be in a better position to ward off Microsoft Corp.' s unsolicited takeover bid or at least argue for its suitor to raise the cash-and-stock offer from its current value of about $42 billion. Google is trying to help Sunnyvale-based Yahoo thwart Microsoft by helping Yahoo place ads on its Web site as part of a test scheduled to conclude next week.[1] Yahoo Inc. will get more attention than usual when it announces earnings Tuesday, and not just from investors wondering how its revenue stacks up against Google Inc.' s strong quarter. This week's report will be an opportunity for Yahoo to try to demonstrate that it is worth more than Microsoft Corp.' s unsolicited takeover bid. Yahoo's earnings announcement comes days before Microsoft reports its own earnings Thursday and Microsoft's threatened Saturday deadline for launching a hostile takeover effort. Any big surprises from either company's financial results could alter the negotiating landscape, particularly around their standoff over Yahoo's value.[18] Last month, only two weeks before the end of the quarter, Yahoo was able to reaffirm earlier projections it shared with analysts for the period. Another potentially positive sign was Thursday's earnings report from Yahoo's rival, Google Inc. (GOOG), providing at least some reassurance that the online- advertising market underpinning both companies is still seeing healthy demand. "It seems like there's less likelihood of a surprise from Yahoo now," Sandeep Aggarwal, a Collins Stewart analyst, said in an interview after studying Google's report. Data released earlier this week by search-marketing firm SearchIgnite showed that Yahoo, traditionally on the losing end of such reports, actually managed to increase its share of the total pool of search-advertising revenue. Yahoo's share of such ad spending grew to about 24% in March, according to the SearchIgnite data, while Google's share dipped to roughly 70%.[19]
In after-market trading, Google'''s shares grew 17% to $525.96. (It'''s currently trading at about $540). In the earnings call, Schmidt also referenced the ad test with Yahoo, saying '''It'''s nice working with Yahoo and we like them very much.''' Aaaw! Yahoo is set to report its earning on Tuesday and they will likely meet Wall Street'''s expectations, industry watchers say.[20] The stakes haven't been lost on the chief Yahoo and his advisers. The company has been more solicitous than usual to Wall Street analysts leading up to its momentous earnings report Tuesday, according to one analyst familiar with the matter. The tactics the analyst described portray a company seeking to engage research analysts more aggressively and present their inner workings in the best possible light. In theory, Yahoo could even adjust its numbers for the quarter, by piling up sales to favored customers in exchange for discounts later, for example. If it chooses that course, it would represent a significant policy shift, as Yahoo's management has a reputation for being straightforward with analysts on the health of its business. While Google's strong earnings report may say something about the health of its closest search rival, the two companies remain distinctly different in many ways. Analysts point out that Yahoo's fortunes have been diverging from those of Google for roughly three years now. Despite some signs that Yahoo may have regained some focus of late, that trend has continued unabated, they say.[19] The sentiment on Wall Street so far, however, seems skeptical at best. At Jefferies & Co., analyst Youssef Squali responded to Yahoo's initial disclosure of its three-year plan by writing to clients that it featured data that "require a leap of faith that's difficult to make." In note published Friday, Squali wrote that he's maintaining a buy rating on Yahoo. That's based, he cautioned, only on the likelihood that Microsoft will ultimately prevail in its desire to buy Yang's company. One initiative Yahoo has undertaken that's been praised by analysts in the past, the outsourcing of its search-advertising business to Google, is widely expected to die should Microsoft take over. Google Chief Executive Eric Schmidt said during a conference call with analysts Thursday that he's "very excited" about a current test of the outsourcing arrangement, which recently marked its second week.[19] Just three months ago, Wall Street analysts were panicking as the Internet darling appeared to be losing steam, and investors punished the stock, erasing most of the meteoric gains Google had posted in 2007. "It's clear we are well positioned for 2008 and beyond, regardless of the business environment we find ourselves surrounded by," chief executive officer Eric Schmidt said during an afternoon conference call.[21]
SAN FRANCISCO (AP) - Wall Street is renewing its love affair with Google after weeks of worry about slowdown in online advertising. The Internet search company's stock soared 20% today, restoring $28 billion in wealth to its shareholders. That's the biggest 1-day gain for Google since the company's initial public stock offering in August 2004.[22] After subtracting the commissions paid to the company's advertising partners, Google's revenues stood at $3.7 billion - about $100 million above analysts' estimates. The results restored some of the $75 billion in shareholder wealth that had evaporated with the 35% drop in Google's stock price this year. "It's a good time to be a Google bull," said Colin Gillis, an analyst at Canaccord Adams.[23] Google said sales were up 42% to $5.19b for the quarter ended 31 March. For the first time, the California-based firm earned more revenue abroad - 51% of total sales - compared to its home market. This was partly due to a slump in the weak dollar which increases the value of non-U.S. earnings. Its shares fell $5.50, or 1.2%, to $449.50 before its results were released, but they rebounded sharply after the closing bell which means that when New York trading begins on Friday, they will rise. It's a good time to be a Google bull,"" said Colin Gillis, an analyst with Canaccord Adams.[3] Earnings per share came in at $4.84--beating analysts' expectations that averaged in the $4.50 range. Part of Schmidt's optimism in the face of what he called "macroeconomic factors" in the U.S. stemmed from the fact that a slight majority of Google's revenues (51%) came from outside of the United States--the first time since the search giant began operating internationally.[11] The news lifted Google's recently drooping shares by more than $76, or 17 per cent. "This is mostly a relief rally," said Stanford Group analyst Clayton Moran. "People are relieved that things aren't as bad as they thought." Google's global appeal propelled the Mountain View-based company as more than half its revenue came from outside the United States for the first time in its 9½-year history.[15] Google's hard-hit shares surged 18 per cent to top $500 -- a level last seen in February -- as the company showed signs of better cost control and earned more revenue abroad than at home for the first time, partly because of the weak dollar. "It's a good time to be a Google bull," said Colin Gillis, an analyst with Canaccord Adams.[6]
Management has said the slowdown in ad clicking largely reflected changes that purposefully reduced the volume of commercials in an effort to deliver more compelling messages that lead to purchases. By making this switch, Google bet that advertisers would be willing to pay more for each ad link and ultimately generate more revenue from fewer clicks. That appears to be what happened in the first quarter when the company said the number of paid clicks from last year rose by 20 per cent, less than half the rate of the first-quarter revenue increase.[15] As it was, Google's international revenue surged by about 50 per cent from last year's first quarter compared with about 30 per cent in the United States.[15]
International markets accounted for 51 per cent of Google's revenue in an expansion that was accentuated by the weak dollar. Google said its revenue would have been about $202 million lower if the dollar's value hadn't declined so dramatically from the first quarter of 2007.[15]
While the news was better than feared, it would be gross overstatement to say that Google "crushed" first quarter earnings. Henry Blodget of the Silicon Alley Insider points out that Google would have missed earnings estimates had they not come down mid-quarter, as its U.S. business, which accounts for about half the company's revenue, did decelerate materially, from 40% growth in Q4 to 30% in Q1. Did paid click growth, from 45% in Q3 to 30% in Q4 to 20% this quarter.[24] Google had lost favor with investors as Web surfing data and the faltering U.S. economy raised concerns that people weren't clicking as frequently on the Internet advertising links that generate most of the Mountain View-based company's revenue. The company more than offset any decline in ad revenue by expanding its foreign business and tweaking its online ad system in a way that helped reap more revenue per click.[22] SAN FRANCISCO Google didn't bomb. The Internet giant said Thursday that its first-quarter net profit rose 31 percent on a 42 percent jump in revenue, soothing investor worries that the growth of its search advertising business was slowing along with the U.S. economy.[12] Google's good news soothed investor worries that the growth of its search advertising was slowing along with the U.S. economy.[12]
"The boys came through," Mr. Gillis said yesterday. "This is going to de-emphasize the attention paid on third-party paid-click data." Google launched more than 100 improvements to its search engine business in the quarter. Although Mr. Schmidt said Google was "excited" to be testing out its new search advertising partnership with rival Yahoo Inc. - currently the subject of a hostile takeover bid from software giant Microsoft Corp. - he would not comment further on the relationship between the two companies. "It's nice working with Yahoo and we like them very much," Mr. Schmidt said yesterday. [21] Schimdt had nothing but kind words to say about Yahoo -- Google's erstwhile rival recently turned potential business partner -- during a conference call with investors following the company's first-quarter results. "It's nice working with Yahoo and we like them very much," Schmidt said of Google's feelings towards its crosstown rival. He declined to comment further on its ties to Yahoo, which has been seeking to find alternative partners to strengthen its hand in negotiations with Google archrival Microsoft Corp on the software giant's takeover offer for Yahoo.[25]
A stronger-than-expected report could give Yahoo ammunition to argue that it should be valued at more than Microsoft has offered. Weaker results would bolster Microsoft's argument that Yahoo's value has fallen in the months since it first made its offer. Yahoo has disapproved Microsoft's offer, stating that the offer undervalues the company and that it wants the software company to raise its offer. "But Microsoft, growing more impatient, has given Yahoo until April 26 to accept its offer or face a proxy fight." For now, hardly over a week left to go until the April 26 deadline set by Microsoft chief Steve Ballmer, after which he said he may lower his $31-a-share bid or take it direct to Yahoo! investors.[5]
Yahoo reported $5.1 billion in net revenue for fiscal 2007. The company will see this growth, it said, by undertaking such initiatives as "serving advertisers' needs so well that they cannot imagine not working with Yahoo." Executives at the company also have been emphasizing key assets such as their email service and home page. Yahoo says that the three-year plan was submitted to its board before Microsoft's bid surfaced, but its strategic value clearly increased once it found itself fighting to remain an independent company. Whether Yahoo's arguments will be supported by the company's progress since January is a question to be addressed when Yahoo reports its results Tuesday.[19] The firm reported revenues in the fourth quarter that were lower than Wall Street expected. Two reports from comScore showed that the number of users '''clicking through''' to paid-for adverts flatlined for two months running, compared with annual growth of up to 40% just six months ago. (Google says this is the result of a tweaked strategy ''' it wants fewer but better-quality clicks ''' and is expected to expand on this when it announces results this week.) Third, a trickle of senior executives have chosen to leave the company, worrying the market about Google'''s ability to hold on to its best and brightest.[26] Google won back Wall Street with first-quarter earnings and revenue growth that surpassed analysts' predictions, propelled by an aggressive push outside the United States.[1]
The average estimate on Wall Street is that Yahoo will earn 18 cents a share for the period that ended in March, and $1.3 billion in net revenue, according to a survey by FactSet Research. That compares with earnings of 10 cents a share and $1.18 billion in net revenue in the corresponding period a year earlier.[19]
Onward and upward," wrote Garrity, who expects the price to hit $750 during the next year. Friday's rally still left Google shares well below their peak of $747.24 reached less than six months ago. At that point, Google's market value stood at $235 billion, about $66 billion, or nearly 40 percent higher, than at Friday's close. With the company's annual revenue headed toward $20 billion, it's becoming more difficult to produce the hefty gains that excite investors.[4] Google reported first-quarter results following the closing bell Thursday in which the California Internet company reported $1.31 billion, or $4.12 per share, in earnings, compared to $1 billion, or $3.18 per share, in the year-ago period - an increase of 30 percent.[27] First-quarter net income rose to $1.31 billion, or $4.12 a share, from $1 billion, or $3.18 a share, in the same period a year ago. Excluding the money Google pays to drive traffic to its site, earnings for the first quarter were $4.84 a share.[12] Perhaps most importantly, Baidu.com has succeeded in becoming the dominant search engine by market share in China, like Google has in the U.S., with over 60% of the market. Next week, on April 24, Baidu.com will release its first quarter results. Until then investors are left using Google's earnings as a proxy for how Baidu.com will perform, but it looks like such comparisons are justified - as of publication, Baidu.com is up almost 9% because of Google's surprising results.[28]
Search engine giant Google has helped calm fears over an online advertising downturn after posting earnings of $1.31 billion (''656 million) for the first three months of the year.[29] Now it appears Google's strong revenue earnings could help Yahoo prove that there is still life in online advertising revenue. This of course strengthens their position that Microsoft is undervaluing them.[30] While Yahoo may have enjoyed the same resilience in the search-advertising market Google experienced the first quarter, it says little about other aspects of online advertising in general. Unlike Google, Yahoo depends on translating the many graphical-display ads placed across its broad portal into increasing amounts of revenue -- a task that it has found challenging.[19] The U.K. accounted for 15 percent of Google's revenue, up 1 percentage point from the fourth quarter. Analysts, who had predicted a slump in online advertising, made their predictions based on data from comScore, which showed little growth in paid clicks, according to Bloomberg.[31] Google Inc. tweaked its online advertising formula and accelerated its growth outside the United States to produce a first-quarter profit that surpassed analysts' predictions, alleviating some of the economic worries battering its stock this year.[15]
The potential partnership, in the midst of a test scheduled to be completed next week, would likely face intense antitrust scrutiny. If nothing else, analysts believe Google wants to delay a combination between Microsoft and Yahoo for as long as possible to give it a better chance to widen its lead in the Internet search market, which currently generates the biggest chunk of online advertising.[4] Microsoft Corp. CEO Steve Ballmer may be experiencing bidder's remorse after making an unsolicited $42.3-billion U.S. offer to buy Yahoo Inc. Speaking to a group of nearly 2,000 Microsoft enthusiasts at a technology conference in Seattle, Ballmer asked how many people use Yahoo as their primary Internet search engine. Only a handful of arms went up, with the majority raising their hands for Google Inc.[32] The yawning gulf between it and its rivals is amply illustrated by Microsoft'''s ( MSFT ) $44bn bid to buy up Yahoo! ( YHOO ) and create a serious rival to Google in the sector. Microsoft'''s ultra-aggressive boss Steve Ballmer has made it his stated ambition to '''kill Google''' and '''bury''' its chief executive Eric Schmidt. To do so, he is playing hardball, threatening tactics aimed at pressuring Yahoo! to do a deal fast. Even if Ballmer is successful ''' and he probably will be ''' a combined Microsoft/Yahoo! would still have just 15% of the global search market compared with 62% for Google, according to figures from data firm comScore.[26] Google Inc.' s high ranking executive said on Thursday the company was very much excited to be testing out a partnership to run at least some of rival Yahoo Inc.' s Web search advertising sales. Google Chief Executive Eric Schmidt abruptly stopped short of characterizing how far negotiations with Yahoo had gone or how likely they were to lead to an actual business partnership.[5] The company said that aggregate paid clicks rose some 20% over a year ago and around 4% above the fourth quarter 2007. Rival Netco Yahoo has been exploring a deal under which it would outsource to Google its search advertising as a way to fend off Microsoft's takeover bid.[10] Yahoo rejects that price as too low and has been casting around for other partners. It announced last week a test to outsource search advertising to Google, which sources say is part of Yahoo's plans to form a three-way alliance with Time Warner Inc's AOL to fend off Microsoft. Antitrust experts said regulators would likely oppose any permanent alliance between Google and Yahoo, while they would likely approve Microsoft's proposed merger with Yahoo.[33] Time runs out by Saturday, the date Microsoft has set for Yahoo to accept the deal or face a drawn-out proxy battle by Microsoft to unseat Yahoo's board. Two weeks ago the software giant threatened to lower its offer if Yahoo did not conclude friendly merger talks with Microsoft by April 26th. Yahoo's chief technology officer will use a speech on Thursday at the Web 2.0 Expo industry show to spell out a strategy to open up Yahoo services such as e-mail, news, sports and advertising to make them more relevant across the Web, not just for users drawn inside its own sites.[17] The conceptual underpinnings of Web 2.0, the Web as a platform, have proven to be sound. It might even be fair to say that Web 2.0 has won.Amazon (NSDQ: AMZN), Google (NSDQ: GOOG), Microsoft, and Yahoo are busy building upon the Web as a platform, along with thousands of startups and other large companies like Adobe (NSDQ: ADBE), IBM (NYSE: IBM), Oracle (NSDQ: ORCL), and Sun. There remains a need to explore Web 2.0 in a conference format because some of its major issues remain unresolved. The article goes on to outline some of those big, unresolved issues covered in the conference: user control of data, privacy, security, the nature of "open" in an always-on and connected world, the importance of integrating new mobile and semantic web applications, business models beyond advertising, especially in a world in which Web 2.0 platforms are becoming serious business infrastructure.[34]
Google's surprising results provided evidence that the market for online advertising remains strong despite the weakening U.S. economy, apparently contradicting assertions by Microsoft that Yahoo's value has been diminished by a weaker economy and a slowdown in the advertising business.[35] Last year it began offering software programs online (such as email and word processing) in direct competition with Microsoft. As BusinessWeek notes, in each of these areas Google faces '''credible and often large competitors''' ''' not something that the firm is used to in the search sector. Most of all, as it broadens its ambitions from search into software, the business faces a Microsoft that has been in '''kill Google''' mode for well over a year, spending billions on ad-related acquisitions even before its audacious attack on Yahoo![26] While Yahoo is seeking a business partnership with Google, unlike the outright merger that Microsoft wants, legal experts say any deal between the world's two largest Internet search services will draw heavy scrutiny from U.S. and European competition regulators.[33] The service competes with rival services from Microsoft and Google, the leading seller of online text-based ads. On April 9, Yahoo said it was conducting a limited test of Google's search ad service on its U.S.-based Yahoo.com portal. Yahoo's pairing with Google isn't necessarily a sign that it's dissatisfied with the results from Panama, Garrity says. He said the deal with Google was intended mainly "to get a rise from Microsoft and to satisfy shareholder concerns that they are willing to try alternatives such as outsourcing search to Google."[7] A Giant Leap For Y! By: Navneet Kaushal 2008-04-18 Wall Street Journal has reported that Yahoo! Inc, and Google have got closer to a partnership deal after the successful testing of Google advertisements in Yahoo! SERPS (Search Engine Result Page). On April 10th 2008, we had reported to our readers that Yahoo! was going to test Google's ads in its SERPS.[36] A trial run of the latest agreement, which would mean that Google will place the ads alongside search queries conducted by Yahoo! users, have yielded positive results, suggesting a wider roll-out may be imminent, according to the Wall Street Journal.[5]
Sources told the Wall Street Journal that the limited test of Google that Yahoo! set up went well. It looks like Google is back on track to be that $1,000 stock.[37]
Good news hit the online advertising world today with the announcement that Google handily topped Wall Street estimates for the first quarter.[31] Associated Press - April 18, 2008 6:24 PM ET SAN FRANCISCO (AP) - Wall Street is renewing its love affair with Google after weeks of worry about slowdown in online advertising[22]
The financial targets that guide Wall Street's expectations had fallen during the past two months as Web surfing data convinced analysts that Google's advertising links aren't attracting as much consumer interest amid mounting evidence the U.S. economy had tumbled into a recession. Google makes money from the links only when Web surfers click on them.[1] '''Google'''s continued growth shows how digital advertising continues to prosper and offer efficiencies that attract advertisers and increased spend despite worries about the economy,''' said Duncan Perry, director of corporate strategy at Steak Media. '''Of particular interest is the growth in mobile searches mentioned by Sergey Brin on the earning calls with Wall Street; this is an area we feel is finally taking off for consumers and will continue to grow throughout 2008 and into 2009.[20]
Silicon Alley Insider Facing what was perhaps the most important earnings call in company history, Google on Thursday met the Street's challenge, posting stronger than expected first quarter earnings thanks to robust growth from its international operations.[24]
Schmidt said Google'''s targeted ad business was responsible for the growth, saying international sales accounted for most of the company'''s revenue ''' a first for Google.[20] The trend threatened to chip away at Google's earnings because the company typically gets paid by the click. Although there were signs of decelerated clicking in the United States, Google more than offset any negative effects by expanding its foreign business and tweaking its online ad system in a way that helped reap more revenue per click.[4]
"The boys delivered." Google, one of the hottest technology stocks of 2007, had seen its shares erase last year's 50-per-cent gain since the start of 2008 on investor concerns that the online ad industry was maturing and vulnerable to a U.S. economic downturn. "It's clear to us that we're well positioned for 2008 and beyond, regardless of the business environment that we find ourselves surrounded by," chairman and chief executive officer Eric Schmidt told a conference call.[6] Google shares shot up more than 16 percent to $526 in after-hours extended trading, after falling $5.29 to $449.54 during the regular session. It was a welcome recovery for the Silicon Valley giant, whose stock had sagged as investors increasingly worried that it would fail to deliver the knock-your-socks-off financial performance of years past.[12] In 4 p.m. trading on the Nasdaq Stock Market Wednesday, Google shares rose 1.8%, or $8.19, to $455.03. They are down about 34% since the start of the year. Mr. Aiken says his analysis of search-ad activity and conversations with search-ad buyers indicate that small- and medium-sized search advertisers are pulling back. Such a development would probably drag on Google's search-ad revenue, because about 99% of its more than one million advertisers and the majority of its revenue come from that category, according to people familiar with the matter.[9] The quarterly results sent Google's share price rocketing again during after-hours trading last night - the 17% jump gives the company a theoretical value of about $120bn, which isn't bad for a company that only made about $10bn in revenue last year (using 'only' in the loosest sense of the world, of course). It's actually dropped quite some considerable way since last November, when it was valued at an extraordinary $170bn.[13] Analysts expect first-quarter results to show revenues climbing 40% to around $3.5bn, with profit per share up 22% despite last year'''s hiring binge and higher R&D; spending. That does not sound like a company in trouble.[26]
In the event of a sale, Yahoo will need to show some strong growth if it hopes to wring any more money from Microsoft, Squali says. "If they don't report an 11% or 12% gain in revenue growth, which is about where consensus is, then they weaken their case against Microsoft and there is no reason for Microsoft to come in and pay a bigger premium," he said. Pyykkonen agrees, saying Microsoft probably won't sweeten its bid unless Yahoo demonstrates some financial upside. "This is almost like a poker game with Microsoft calling Yahoo's bluff," he said. "But if Yahoo has a good quarter, maybe they can get Microsoft to ante up with one or two dollars (more per share)."[7] Analysts have become so used to it smashing forecasts that double-digit growth comes as a crushing disappointment. Back in January, its share price slid because it 'only' managed 52% revenue growth. We're guessing a few other companies wish they had that kind of problem at the moment. One man who probably won't be too pleased by these latest figures is Microsoft supremo Bill Gates, who now faces the prospect of paying a bit more to get his hands on Yahoo. If there had been an advertising slowdown, he could have argued that Yahoo was wrong to hold out for more money.[13]
Yang has nonetheless spearheaded a campaign to convince shareholders and analysts -- not to mention Microsoft -- that good things are yet to come. As part of this effort, Yahoo in March disclosed an investor presentation that included goals for the company through 2010. Yahoo said, for example, that in that time frame, it intends to double its operating cash flow from $1.9 billion to $3.7 billion and to reach $8.8 billion in annual net revenue.[19] Yahoo Chief Executive Jerry Yang called the firm's forecast a "testament to our ability to perform in line with our expectations despite the current economic environment." He added that "Yahoo is worth well more as a stand-alone company than the value offered in (Microsoft's) proposal." Even a strong quarter won't be enough to hold off Microsoft, says Youssef Squali, an analyst at Jefferies Co. He and many Yahoo investors believe the Web company's weak performance in recent quarters has made a sale inevitable.[7]
Yahoo and Microsoft, which rank No. 2 and 3 in web search respectively, are at a stand-off. Microsoft has said its $US31 a share offer is fair, while Yahoo has said the cash-and-stock offer significantly undervalues the company.[38] SAN FRANCISCO (Reuters) - Yahoo Inc (YHOO.O: Quote, Profile, Research ) faces a critical week that could decide whether the pioneering Web company can remain independent or must surrender to an unsolicited takeover by Microsoft Corp (MSFT.O: Quote, Profile, Research ). Yahoo is racing to forge a credible alternative that lets it stay independent or at least forces Microsoft to raise its $31 a share cash-and-stock bid, now valued at $42.8 billion.[17]
Google held a 59.2 per cent share of the U.S. Web search market in February, compared with Yahoo's 21.6 per cent and Microsoft's 9.6 per cent, according to research firm comScore.[33] While Google dominates search, Yahoo argues the market for online display ads - the splashy banners or video ads that companies love - is so fragmented that Yahoo is the biggest player with just 8 per cent of the market.[33]
Schmidt also commented on Yahoo's announcement last week that it would trial Google search ads in what some observers have said is a move on the part of Yahoo intended to stave off Microsoft's advances. "We're very excited to be participating in this test," he said. "I don't think it's really appropriate to speculate beyond that, but it's nice to be working with Yahoo and we like them very much."[2] Analysts estimate that the outsourcing deal could add hundreds of millions of dollars to Yahoo's annual revenue. However, it would likely spell the end of its presence in search -- as Google would be able to corner even more of the lucrative market. "It's nice to be working with Yahoo," Schmidt said, "and we like them very much."[19] Due to the fact that Google generates more revenue for search queries than Yahoo!, an alliance between the two could bring in as much as $1 billion to Yahoo's annual cash flow.[36] Yahoo has said it expects to post revenue of between $1.28 billion and $1.38 billion. (Revenue for the fourth quarter last year was $1.83 billion). It is expecting a downturn, unlike Google, which posted $4.83 billion in its fourth quarter, significantly less than the $5.19 billion it'''s touting now.[20] Mountain View-based Google announced a 31% increase in first quarter profit to $1.31 billion from $1 billion last year on revenues of more than $5 billion.[28]
Google's net income for the first quarter rose 30 percent to $1.31 billion; excluding one-time charges, the search giant earned $1.54 billion, beating estimates of analysts polled by Thomson Financial.[31] The Internet search leader said Thursday quarterly profits climbed 30% to $1.31 billion, surpassing analysts' predictions for the 12th quarter out of the 15 since it first sold stock. That trend had helped propel its shares to dizzying heights until the recent plunge.[23]
The leader in Internet search beat the Street by a whopping 32 cents a share. That's not to criticize the analysts. It's preferable that they be cautious. Clearly they overdid it. Google's just one buoyant data point in this very young earnings season.[8] The announcement sent shares in the search engine soaring past the $500 mark. Colin Gillis, an analyst with Canaccord Adams, told Reuters: "It's a good time to be a Google bull.[14] Google is the clear leader in the Search Engine field,with 56.3 percent market share. Its nearest rival Yahoo, has less than half that, and MSN only just over 8 percent. The rest including AOL, have between them a total of 13.8 percent. Google added You Tube to its acquisitions a couple of years ago. Before these lastest results, there had been losses.[39] Google now commands a mighty 59.8 percent share of Internet searches, to 21.3 percent for rival Yahoo and 9.4 percent for Microsoft, according to ComScore. Microsoft is seeking a solution to its declining share by making a hostile takeover bid for Yahoo.[40] Yahoo! has been looking for ways to fend off Microsoft's takeover bid which at present stands at $42 billion or $29.26/share. Both these Internet giants (Yahoo! & Google) are looking for ways to link-up without causing any legal implications. According to some sources, if this deal materializes, it still won't affect Microsoft's chances for a takeover.[36]
Microsoft Corp.' s bid to acquire Yahoo Inc. also could create a more formidable competitor to Google. Recognizing the threat, Google is trying to help Yahoo thwart Microsoft's takeover bid by using its lucrative advertising system to place commercial links on Yahoo's Web site.[4] Google Inc.' s better-than-expected first-quarter results could bolster rival Yahoo Inc.' s negotiating clout in its takeover talks with Microsoft Corp., but analysts cautioned about reading too much into Google's news.[35] Next week, Yahoo will report first-quarter results and if it faired better as Google did, chances are it will have built a case for warding off the takeover bid from Microsoft.[27]
Analysts say Yahoo's first-quarter earnings results could be the Web portal's last hope to remain an independent company or wrangle a higher bid from suitor Microsoft ( MSFT ).[7] Yahoo's first-quarter report comes as the company faces an increasingly aggressive buyout bid by Microsoft, made more than two months ago and initially valued at $44.6 billion.[19] Microsoft announced the unsolicited offer of $31 per share, or more than $40 billion, in February for slumping Sunnyvale, Calif. -based Yahoo, which rejected the initial bid and is seeking alternatives.[41] A few say that the carefully planned tie-up is simply a course of action on Yahoo!'s part to taunt Microsoft, given that in the UK, for instance, it would consolidate more than four fifths of the search advertising market in one place, which would likely give rise to anti-trust issues. Others say that a partnership would give Yahoo some needed leverage as it tries to ward off an unwelcome bid from Microsoft Corp., or at least force the latter to raise its $31-a-share offer.[5]
Yahoo has reportedly sought several alternatives to Microsoft's acquisition, including, most recently, a tie-up with Google for search advertising.[42] Yahoo, in trying to keep Microsoft away, is exploring other options and is in the midst of a two-week experiment to outsource search advertising to Google.[40]
Yahoo! is reportedly getting closer to that controversial deal that would outsource its search advertising to Google.[37]
Yahoo Search Marketing and Internet media firm Media Corporation have partnered to provide search results and advertising across Media Corp'''s extensive publishing network. Media Corp'''s chief executive, Justin Drummond, believes that adding Yahoo'''s paid search and content match solutions to their existing in-house publishing network will drive new revenue and enhance users''' experience. Media Corp'''s current advertising consists mostly of display and banner formats across such websites as gambling.com, onthebox.com and creditcardexpert.co.uk.[43] Microsoft Chief Executive Steve Ballmer gave a forthright public assessment of his company Thursday, confronting the huge advantage Google holds in Internet search even among devoted users of Microsoft products and calling Windows Vista a "work in progress." He was speaking in Seattle to a conference of about 1,700 Microsoft Most Valuable Professionals, independent IT experts who specialize in Microsoft software and services. It is an important constituency for Microsoft, one that is friendly but also highly knowledgeable and unabashedly critical. Ballmer said at the outset that he was expecting to have "a little bit more wild and woolly, rockin' and reelin' kind of a discussion than I do with my average customer group." By the end of the hourlong speech and discussion, he sported a Canada hockey jersey and a Homer Simpson necktie gifts from the audience and a sheet of notes he took on ways to improve Microsoft.[42] Google's mission is to "organize the world's information" and it uses superior search combined with specialized image search, map searches and a large list of other tools to do so combined with an increasingly large offering of applications. The profit engine that enables such services is of course targeted "paid-click" advertising. Baidu.com certainly seems to want to organize the world's information, or at least the world's information in Chinese - the company's flagship product is an Internet search algorithm that is considered superior to Google's for the Chinese-language because of such features as the ability to search by phonetics, combined with a specialized mp3 search, image search, video search, news search, financial search and even a "Baidu Encyclopedia" - to name only a few.[28] "Microsoft announced a renewed version of live news search service this week that brings together stories, photos and video from around the world." Microsoft clearly has not given up in its effort to improve its Internet search service and catch the runaway leader, Google, and its latest assault on everyone's favorite data warehouse, Microsoft is tossing a fresh offering onto the scene in the form of Live Search News.[44]
"And we have had a news category or a news vertical for a while, but to be honest, had not put a lot of effort to it." Microsoft has said it is focuses on bettering Live Search in specific topic and content areas that attract a lot of interest, such as shopping and entertainment. Google News gathers stories from "more than 4,500 English-language news sources worldwide," according to its Web site.[44] Microsoft is testing subscription software amid new competition from Google Inc., which offers free word-processing and spreadsheet programs that work through a Web browser.[45] There had been fears that the Callifornian-based firm was being hit by the slowing U.S. economy. Analysts say Google's strong performance could strengthen Microsoft's resolve to buy Yahoo, even if it means raising its nearly 30 billion Euro offer.[39] Google's two largest competitors, Microsoft and Yahoo, are in a complicated mating dance, with Yahoo having rejected Microsoft's original offer and Microsoft making threatening noises about a hostile bid for control.[31]
The tech industry needs to resolve whether user control of data, an issue that intersects with the issue of privacy, will remain part of the Web 2.0 concept, because there's significant incentive for companies to control and exploit user data. On the Web 2.0 preview blog, Erika Hall, lead strategist of Mule Design, offers a glimpse into how some industry figures think about this issue. "Given the controversy surrounding Google Street View and tools like Twitter and Dopplr, and Yahoo's Fire Eagle, I think George Orwell would be stunned by the extent to which people are embracing the eradication of privacy," she observes.[46] Amazon, Google, Microsoft, and Yahoo are busy building upon the Web as a platform, along with thousands of startups and other large companies like Adobe, IBM, Oracle, and Sun. There remains a need to explore Web 2.0 in a conference format because some of its major issues remain unresolved.[46]
Revenues totaled $5.19 billion, up 42% from a year ago. Google makes money from advertising links only when Web surfers click on them. [23] Analysts surveyed by Thomson Financial had expected Google to report first-quarter revenue of $3.61 billion excluding commission paid to partner Web sites.[12]
Google Rides High On Strong First-Quarter Revenues Apr 18, 7:00 AM Google's stock soared by nearly $80--more than 17%-- in after-hours trading after the search giant delivered. CBS Interactive Overhauls Management, Plans For Acquisitions Apr 18, 7:00 AM Under pressure to offset losses at its parent company, CBS Interactive on Thursday announced a broad.[11] Driven by stellar first-quarter results that surprised industry analysts, Google shares surged $89.87 to finish at $539.41. It marked the biggest one-day gain since Google's initial public stock offering in August 2004, leaving the shares at their highest closing price since January.[4] Google shares soared 17%, or $76.42, in after-hours activity after declining $5.49 to finish the regular trading session at $449.54. If not for expenses to cover stock given its employees, Google said it would have made $4.84 a share instead of $4.12. That figure outstripped analysts' projections of $4.52 a share.[23]
Shares of Google soared, rising more than 21 percent and kick-starting a market rally that lifted the Nasdaq over 3 percent in early afternoon trading Friday after tech investors got behind the search giant's stock.[27] Investors were thrilled with Google's results, pushing Google's stock up 17 percent in after-hours trading to $525.96.[40]
Dinosaur Securities analyst David Garrity also is convinced that the worst is over for Google's stock, which was down 35 percent in 2008 before the first-quarter earnings changed investor sentiment. "We think (Google's stock) has seen its 2008 low.[4] The first-quarter performance reinforced the belief that Google is a "must-own stock," American Technology Research analyst Rob Sanderson wrote in a Friday note. "While (economic) concerns won't be completely dispelled, we believe the growth story remains intact and investors will again fall in love," he wrote.[4]
As Google CEO Eric Schmidt said, paid-click growth was "much higher" than analysts expected. This news is clearly good for Google - and it shows with the stock up more than 20% today - but how good it is for Baidu.com depends on how true the moniker "the Google of China" is for the company.[28]
Google chief executive Eric Schmidt said, "Our ongoing innovation in search, ads, and apps helped drive healthy growth globally across our product lines, yielding another strong quarter for Google."[27] Eric Schmidt, chief executive officer of Google, commented that the company's innovation within search, advertising and applications is behind the healthy global growth.[14]
Like eBay earlier this week, Google's been cashing in from the growth of its overseas business, coupled with the weakness of the U.S. dollar. The search giant has been building its overseas business furiously, not least here in the UK where it seems to have hired half of London - and this advertising spend goes much further when it's converted back into dollars.[13] Nielson noted that Google's search portion of the U.S. market grew 25.8% year-over-year in February, 2008 while Yahoo search growth was 2.5%.[27]
Prominent market-tracking firm ComScore has put out reports saying that growth in click-throughs on Google's trademark Internet search ads is declining, spooking investors.[40] When Google Inc. reports first-quarter earnings after the market close Thursday, investors will find out whether their worries about the impact of the softening economy on Google search ads are justified.[9] SAN FRANCISCO, California (AP) -- Investors appear ready to embrace Google Inc. again after weeks of hand wringing over whether the faltering U.S. economy would bog down the Internet search leader's moneymaking machine.[1]
Investors pay close attention to Google's financial results because it is a bellwether for online advertising. Market research company EMarketer had lowered its 2008 forecast for U.S. online spending because of concerns that consumers would buy less on the Web.[12] The search engine giant turned in first-quarter results that showed not only that users are still clicking on the company's ads, but that the online advertising market is strong even in the face of U.S. recession fears.[21]
Google shrugs off ad sales fear Google has reported market-beating results for the first three months of the year, easing worries of a slowdown in online advertising.[3] Google has reported encouraging results for the first quarter. This has eased worries that online advertising could be slowing.[39]
Google ended the first quarter with a 60 percent share of the U.S. search market, up from 58 percent at the end of the fourth quarter, according to comScore Media Metrix.[4] Google said profits rose 31 percent in the first quarter on 42 percent revenue growth.[40] Paid click growth "is" slowing, but not as greatly as investors had feared, says Gene Munster, an analyst with Piper Jaffray. Paid click growth fell to 20 percent this quarter, from 30 percent in the fourth quarter and 45 percent in the third quarter. It doesn't matter, Munster says, because Google now earns more per click. "The law of averages make it hard to continue growing like Google once was," he says.[40] Greg Sterling, an analyst with Sterling Market Intelligence, says Google's results shows that investors' fears "were somewhat unfounded. Google's growth was not as spectacular as it would have been in a spectacular economy, but it's still the biggest quarter they've ever had."[40]
"We're well-positioned for 2008 and beyond, regardless of the business environment we find ourselves in." Google disappointed investors after its fourth quarter, when it reported results that didn't match Wall Street's expectations.[40] Google results day is always fun, because the company appears to operate on completely different set of rules from everyone else on Wall Street.[13]
The chief executive and his trusted lieutenants at Yahoo Inc. (YHOO) face a critical juncture Tuesday, when the embattled online giant issues what arguably will be the most closely watched quarterly report in the company's history. Hit the numbers that Yang and the gang have promised Wall Street, and Yahoo just might buy a little time to retain its coveted independence.[19] "I think any company contemplating a merger or acquisition would want to get it through during the Bush administration," said Sidak, expressing a commonly held view in the legal community that, even if Republican nominee John McCain wins the 2008 election, there will be stricter controls. "Even if McCain is elected, I think there's reason to believe they'll be some tightening of antitrust enforcement," he said. Evan Stewart of law firm Spaeder Zuckerman LLP predicted that, when the dust settled on the various deal scenarios, Yahoo would lose its fight to stay independent, a view widely shared among Wall Street investors betting on the outcome. There are "very creative investment bankers providing Yahoo with all these very different end-games," he said.[33]
As for a permanent Yahoo search partnership that had been dubbed "increasingly likely" by Wall Street Journal sources, Schmidt would only allow that the giant was excited to be participating in the test. "It's the beginning of the second week and we can't speculate beyond that, but it's nice to be working with Yahoo," Schmidt said.[11]
Asked about the prospect of Google fully taking over Yahoo's search ad program, Schmidt said, "We're very excited to be participating in the test. It's not appropriate to speculate beyond that."[40] Google boss Eric Schmidt said ""innovation in search, ads, and apps"" helped to boost earnings growth.[3] When Google reported fourth-quarter earnings Jan. 31, Google Chief Executive Eric Schmidt said the company had not seen any effect from the economic slowdown.[12]
With a market capitalization of under $12 billion and earnings per share (EPS) of $2.59, Google's quarterly earnings are significantly higher than Baidu.com's annual earnings.[28] Shares of Google have fallen more than 30 per cent since peaking at $747.24 (U.S.) on Nov. 7, 2007.[21]
Google announced that paid clicks for the company grew 20 per cent in the quarter over the same period last year, and were up 4 per cent over the December quarter.[21] TheStreet.com points out that in last year's first quarter, Google's paid clicks had grown 52 percent year over year.[31]
Data from research firm comScore Inc. showing a drop in the number of times people click on the ads have fueled the jitters, which have already knocked almost $75 billion off Google's market value since the beginning of the year.[9] Data released in late February by Internet tracking firms seemed to indicate that Google's core "paid-click" advertising business was flagging. Google makes money from these ads only when a user clicks on one, and the number of those clicks appeared to be slipping. While some analysts at the time argued that Google was improving its technology to prevent click fraud and reduce lower-quality clicks - thereby providing a stronger return on investment for advertisers, raising the price Google can charge for those ads - many analysts responded by slashing their price targets and lowering expectations.[21]
Google only gets paid when a Web user clicks on one of the countless little ads that show up near Internet search results.[40] Yahoo, who recently undertook a successful U.S.-based test with Google to deliver relevant AdSense ads alongside their search results, has now entered into yet another partnership.[43] Yahoo, keenly looking at ways to escape being bought by Microsoft, has even teamed up with rival Google in a two-week experiment which will see search-driven Google adverts alongside the search results of Yahoo's website.[3] Google's rise in price lifted search competitors Microsoft (Nasdaq: MSFT) and Yahoo (Nasdaq: YHOO) as a result.[27]
Only a handful of hands went up - fewer than for Microsoft's Windows Live search. The overwhelming majority raised their hands for Google, which Microsoft is seeking to challenge as an online advertising powerhouse.[38] Microsoft has unveiled a revved-up Internet search engine geared to challenge its online arch-rival Google, reported the Associated Press (AP).[47] Microsoft, on the other hand, "fully supports H.B. 5765 as it stands today," Robert Gratchner, the company's director of privacy, testified last month. He noted that Microsoft "announced a set of robust privacy principles last July for online search and advertising." He told the General Law Committee the company believes the bill is "a thoughtful and well-crafted attempt to balance the need to ensure consumer privacy with important business realities of the Internet."[48] Microsoft had 9.4 percent, according to online measurement company comScore. Ballmer sought his own anecdotal measure of search share from the audience of IT pros, many of whom have dedicated their careers to becoming expert in Microsoft's products.[42]
Discussing the company's trailing position in online services, Ballmer referred to the uncertainty surrounding Microsoft's $31-a-share bid for Yahoo.[42]
Options include an experimental advertising alliance with Google Inc. that could lead to a long-term partnership and, according to published reports, a combination with online operations of Time Warner Inc.' s AOL. Yahoo has not yet disclosed whether it's hired outside consultants on the bid.[41] Yahoo Inc's attempt to form an alliance with Google Inc to stave off Microsoft Corp could run into more trouble with antitrust regulators than Microsoft's unwelcome takeover bid.[33] WASHINGTON - Microsoft Corp. has yet to convince Yahoo Inc. to agree to a friendly takeover, but the software company is already hiring lobbyists to help it convince regulators to let the deal _ hostile if it has to be _ go through. Software company Microsoft Corp., bracing for a regulatory squabble in its takeover bid, recently hired Bryan Cave Strategies LLC to lobby the federal government on the proposed multibillion-dollar deal.[41]
Microsoft paid $6 billion for aQuantive, Yahoo bought BlueLithium for $300 million and Time Warner Inc's AOL unit bought Tacoda for an undisclosed amount. Gregory Sidak, founder of the economic consulting firm Criterion Economics, said U.S. regulators are likely to view the tech market as so dynamic and fast-changing that they will abstain from blocking any particular deal or joint venture in what appears to be an ultra-competitive industry. European regulators are generally more likely to act to block mergers than their U.S. counterparts.[33]
A year ago, Yahoo reported per-share earnings of 10 cents and ex-TAC revenue of $1.18 billion.[7] Google's net income during the first three months of the year rose to $1.31 billion, from $1 billion in the same months of 2007. Its revenues for the period reached $5.19 billion.[14] The company reported an operating income of $1.55 billion and $5.19 billion in revenue for the first quarter.[20] Yahoo says it expects between $1.28 billion and $1.38 billion for the first quarter.[7] Netco said it earned $1.31 billion during the first quarter vs. $1 billion a year earlier.[10]
First-quarter revenue totaled $5.19 billion, up 42 per cent from $3.66 billion from a year ago.[15] Gross revenue rose 42 per cent to $5.19 billion, just ahead of Wall Street targets.[6] Revenues jumped by 42% year-over-year to reach $5.1 billion--trumping Wall Street's consensus of about $3.5 billion.[11]
Excluding one-time items and stock option expenses, profit was $4.84 per share, comfortably ahead of the average Wall Street forecast of $4.53 on Reuters Estimates.[6] The search giant's profit jumped almost a third in the first quarter despite Wall Street concerns about the faltering economy's impact on its paid click business.[10]
By contrast, paid clicks in the first quarter of 2007 rose 52 per cent over the prior first quarter, but analysts welcomed the results.[6] The US-based group beat forecasts with news of a 30 per cent hike in first quarter profits.[49]
International markets now account for more than 51 per cent of Google's revenue.[21] Analysts warned about drawing too strong a parallel between Google and Yahoo because Google has a much stronger search-advertising business and is more geographically balanced than Yahoo, whose revenue is.[35]
Canaccord Adams analyst Colin Gillis has remained bullish on Google's prospects throughout the company's stock slide. While others were dropping their expectations, Mr. Gillis maintained his price target of $755.[21] If the stock surges to a similar gain during Friday's regular session, it will be the largest one-day increase in Google's shares since the Mountain View-based company went public in August 2004. "This is mostly a relief rally," Stanford Group analyst Clayton Moran said. "People are relieved that things aren't as bad as they thought."[1]
Investors drove shares of Google back past $500 in after-hours trading, restoring some of the momentum the company had lost in recent months.[21] The pleasant surprise delivered late Thursday lifted Google's recently sagging shares by $76.42, or 17 percent, in after-hours trading.[1]
One thing is certain: there are interesting battles ahead. Since long-time staff were able to cash in the last of their pre-float share options last year, it has been open season for poaching Google engineers and executives. Typically, these are highly motivated individuals, already wealthy from their stock bonanza, who relish fresh challenges.[26] DirecTV accounted for 84 percent of the company's sales last year. Electronic Arts Inc. extended its tender offer for Take-Two Interactive Software Inc. to May 16 and said it would pay shareholders less after they approved a plan to give more stock to top executives.[45]
Thinking that free is the only aspect of software that matters is freetarded. This is where Microsoft can beat the open source community in general, just as its. NET platform is beating J2EE. Let me quote from the insanely great Fake Steve Jobs blog: Red Hat, the single company freetards always point to when they want to prove that open source can make money, has turned inept, with nothing but bluster and bravado and a deluded belief that they're actually a thorn in Microsoft's paw. Bottom line: they're the new Borland. They're 15 years old and have been publicly traded since 1999 and last year they did all of $400 million a year in sales.[37]
Eyeballs tells it all and according to a report released Thursday by Nielsen Online, Web traffic to the Google parent company grew 12 percent year over year, from a three month average monthly unique audience of 111.7 million in Q1 2007 to 124.9 million in Q1 2008.[27] Yahoo is still the Web's leading portal and can grow in a robust online ad market, says Martin Pyykkonen, an analyst at Global Crown Capital. "If they have a strong quarter, then their argument to stay independent holds some water," he said. "This is not a case where you have to make the argument that Yahoo has to be bought; it's still a company with scale."[7] Substantial growth from Yahoo's ( YHOO ) Web-search and display-ad businesses for the quarter that ended March 31 might also provide a silver lining for investors looking for some upside from the foundering company. "They have every incentive imaginable to meet if not exceed estimates," said David Garrity, an analyst at Dinosaur Securities.[7]
Investors also worried about the effect of Microsoft's effort to buy Yahoo, which could create a more formidable competitor in the online advertising market.[12] Reuters asserts that the fall was the result of investors fearing the online advertising sector was vulnerable to the slowing U.S. economy.[14]
Google Inc. yesterday posted a better-than-expected quarterly profit, defying fears that it faces an online advertising slump and that a U.S. economic slowdown would undermine its business.[6]
Google Inc. silenced its critics yesterday with quarterly financial results that blew by expectations and calmed fears about the vulnerability of its ad business in hard times.[21] As Schmidt says, most of that growth was overseas, not domestic. Industry watchers are still on edge about Google'''s ad business ''' especially since recent comScore reports have indicated that Google'''s paid clicks ''' their bread and butter ''' have declined precipitously.[20] Schmidt also scoffed at recent industry apprehension about comScore's reports of paid-click growth deceleration. "Paid-click growth is much higher than has been speculated by third parties," he said, referencing the 20% growth year-over-year in paid clicks, both on Google and AdSense partner sites.[11]
After a better-than-expected quarterly earnings report called 'amazingly good' by the New York Times, it would seem that Google is defying macro-economic downtrend. Google has ripped a page out of Salesforce.com's handbook and has started up an AppExchange-like Solutions Marketplace site to cultivate third-party programs that complement its own widgetry, initially stuff like Google Apps and enterprise search. [37] Internet giant Google quieted its critics with an earnings report that showed little sign of an advertising decline, despite outside reports to the contrary.[40]
Google's performance indicates the Internet's advertising market -- expected to generate $44 billion (¤27.72 billion) in worldwide spending -- remains robust, especially outside the United States.[15] Sterling says that if Yahoo and Google went all the way with the relationship, it would add $1 billion to Yahoo's bottom line.[40]
Schmidt declined to answer a question about the chances of Google signing a long-term advertising contract with Yahoo -- a deal that would likely face intense scrutiny from antitrust regulators. "It's nice to be working with Yahoo," Schmidt said. "We like them very much."[1] If Yahoo acknowledges Microsoft's offer, it could just scuttle the deal with Google, people familiar with the matter told the Journal.[5] Because, if the Yahoo! Stockholders agree to Microsoft's offer then Yahoo! will simply pull out of the Google partnership.[36]
High ranking executives from Microsoft and Yahoo have met on at least two occasions but were unsuccessful in reaching an agreement on a framework for formal negotiations. Microsoft wishes Yahoo to make its call. Yahoo has been reluctant to set a ceiling and wants Microsoft to raise its original offer before agreeing to talks, people familiar with the matter say. Yahoo is scheduled to report its first-quarter earnings on April 22.[5] Yang has sought to present Yahoo as a thriving entity that could remain independent, or at the very least merit a higher offer. An outstanding earnings report could therefore go quite a ways to bolster his case. Microsoft (MSFT), for its part, has added to the pressure by setting a deadline for Yahoo to either begin negotiating a deal a few days after its earnings release or face a hostile takeover.[19]
Certainly Google's ( GOOG ) first-quarter earnings report made it clear that in at least some cases analysts' estimates aren't too high. [8] Plenty of analysts and commentators (including MoneyWeek) have been arguing for years that Google'''s stock price was grossly inflated and could not be justified by any realistic projections of future earnings.[26] Never mind that it was trading at the fire-sale price of 20 times forward earnings - the market has had no faith in Street estimates. If these early earnings indications hold, if we have more Googles and fewer Nokias, tech stocks (dare we say it?) could finally come back.[8]
Don't expect every company to eclipse estimates by as much as Google did. That beat was preposterous. If enough of the bellwethers exceed expectations and give at least in-line guidance, the market should regain its confidence in forward earnings.[8]
The company has also been unable to challenge Google ( GOOG ) as the leading seller of text-based search ads, the biggest segment of the multibillion-dollar online ad market.[7] Google blames the decline on in-house initiatives to reduce bad clicks. The company pulled a rabbit out of its hat this time ''' it should be interesting to see how/whether the Yahoo-Google ad partnership pans out, and of course, if Microhoo teams up to take it down.[20] As of now, a deal between Yahoo! And Google seems quite likely, as Yahoo! had said some time ago that the Google ad test would be evaluated for a possible search-ad outsourcing arrangement.[36]
Google actually made more money overseas than it did in the U.S. for the first time ever last quarter.[13] Google said so-called "paid clicks" grew 20 percent in the first quarter over the same year-ago quarter, and 4 percent over 2007's fourth quarter.[40] ComScore had said growth of clicks on ads had slowed to 1.8 percent in the first quarter.[31]
The research company predicted that U.S. advertisers would spend $25.8 billion on Web ads, down 6.2 percent, but up 23 percent from $21.1 billion in 2007.[12] U.S. advertisers will spend $25.8 billion on Internet ads, eMarketer says, down 6.2% from earlier estimates but up 23% from $21.1 billion in 2007.[9]
First-quarter net income rose to $1.31 billion, or $4.12 per diluted share, from $1 billion, or $3.18 per share, a year earlier. [6] First-quarter revenue totaled $5.19 billion, up 42 percent from $3.66 billion a year ago.[1] The company reported revenue of $5.19 billion and profits of $1.3 billion.[40] The non-spot category remains a small part of total radio revenues, contributing 8% of the total in 2007, at $1.68 billion.[50] Gross revenue of $5.2 billion, up 42%, was in line with expectations, while net revenue (not including commissions paid to AdSense and other partners) was slightly above, at $3.7 billion.[24]
According to Bridge Ratings, Internet radio's total revenues were about $500 million in 2007, including not just advertising but subscription services.[50]
"The Justice Department would certainly want to take a serious look at that because it would mean that a firm that would want to take advertisements or to place advertisements (online) would have only one place to go," said Aaron Edlin, who teaches law and economics at the University of California at Berkeley. In recent years, Web search services have taken over from once popular portals or home pages, such as AOL, MSN or Yahoo's own home page, as the primary starting point for many consumers seeking information on the Internet.[33] Now, Microsoft, the Web's third largest search engine, is making a play for Yahoo, which is resisting.[48] From GoogleEarth to Virtual Worlds, what was once perceived as a simple search engine has become a complex web of businesses, evoking memories of Yahoo!'''s own all-things-to-all-people ambitions.[26]
About the Author: Nav is the founder and CEO of PageTraffic, a premier search engine company known for its assured SEO service, web design and development, copywriting and full time SEO professionals.[36] Farecast Chief Executive Officer Hugh Crean announced the purchase on the company's blog. He didn't disclose a price or other terms. Microsoft added the company's prediction and planning services to its MSN Travel Web site in July.[45] Although it is not Microsoft's first venture into news aggregation services - the company in the past ran the Microsoft Network Newsbot.[44]
In addition to Microsoft, next week we'll hear from Apple ( AAPL ), Amazon.com ( AMZN ) and chip makers Texas Instruments ( TXN ), Qualcomm ( QCOM ) and Broadcom ( BRCM ). If Google's 20% post-earnings pop is any indication, the market will trade strongly on individual news, both good and bad. That is preferable to last quarter when positive news went unrewarded and anything neutral or negative was slammed. It should make for some rocky sessions.[8] Live Search News also allows you to filter news results supported by categories that are relevant to the story you are viewing. To access this functionality, just click "More on this story" for any article and you will see relevant stories, along with these filters. Microsoft is proposing to release major updates to its Live Search offerings twice a year, in spring and fall.[44] Live was designed to provide users with tools to quickly find, view and organize Internet search results in categories including news, images, e-mail and news feeds, according to Microsoft.[47] As with other forms of Internet search, the news aggregation services will make money by displaying relevant advertising next to the search results.[44]
Chinese Internet search giant Baidu.com, Inc. (NDAQ: BIDU) is benefiting heavily today from Google Inc.' s (NDAQ: GOOG) unexpectedly strong results.[28] Baidu.com is up significantly on sentiment that Google is a good barometer for the entire Internet search sector, but especially Baidu.com.[28]
According to internet audience ratings analyst comScore among others, Google's paid-click growth rate slowed in the U.S. during January, February and March.[2] "We're very pleased with the quarter," Google CEO Eric Schmidt said on a conference call with analysts.[40] Google is exercising "operational discipline," Schmidt said, but added that it continues to explore long-term opportunities. Material from The Associated Press was used in this report.[12]
Google's strong showing, combined with similar reports from International Business Machines Corp. and Intel Corp. this week, suggests that international technology companies are capable of weathering U.S. economic woes.[21] Yahoo! and Google need to be more careful to avoid the wrath of the powerful U.S. competition regulators.[5] The market is spooked by signs that Google is maturing into a rather unfocused company. In the U.S., commentators have made much of the fact that Fidelity'''s two biggest funds have been selling down their stakes in Google; if Fidelity managers have stopped believing in Google, the thinking goes, then maybe there are real problems there.[26]
International revenue for the first time surpassed sales in the U.S., making up 51 percent of the company's total sales.[31] Schwag is becoming more prevalent. According to the Advertising Specialty Institute (ASI), industry revenues from advertising specialties - that is, items and incentives branded with a company logo or marketing message - were up 5.4 percent from 2006.[31]
Radio revenues fell 8% in March compared to the same month in 2008, according to new figures released by the Radio Advertising Bureau--exceeding even Wall Street's negative expectation of a 3% drop. Local advertising, the medium's traditional mainstay, fell 8%, while national tumbled 17%.[50] Google's strong showing outpaced Wall Street expectations, which had faded in recent months.[10]
On 6 November last year, Wall Street valued the firm at an all-time high of $742. It has lost some 40% ''' currently trading around $450.[26] '''We are obviously very pleased,''' CEO Eric Schmidt gloated, during yesterday'''s conference call with Wall Street analysts.[20]
The security problems are compounded by the way in which Web pages now tend to be assembled from data sources that aren't immediately transparent to Web page visitors. Such opacity makes it easier for cyber criminals to conceal malware on trusted pages. Along these lines, the Friday keynote by Google's Matt Cutts, "What Google Knows About Spam," may offer some insight. Google has become a popular target for spammers, not only because of the size of its audience but because its free services can be exploited more effectively through their association with Google's trusted brand. [46] Web 2.0 has also not fully resolved how to share data and offer open APIs while still serving shareholder or business interests.[46]
Jennifer Pahlka, general manager and conference co-chair of the Web 2.0 Expo, said the expo has moved from the initial giddy stage to an event more focused on serious business issues. One topic she expects will generate interest is the proliferation of Web infrastructure options, such as Google's recently launched Google App Engine.[46] User control of data, for example, is one of the key aspects of Web 2.0 as O'Reilly Media CEO Tim O'Reilly explained the term in 2005. In many ways and on many sites, users don't yet control their data. Google users, for example, do not have a button they can press to instantly delete all records of their Google searches from Google's servers.[46]
ComScore's Mr. Abraham says some people have jumped to conclusions that comScore's data don't support. "People automatically assumed Google's revenue is going to be missing their target," he says.[9] By contrast, Google's revenue grew at a 63-per-cent rate in the same quarter a year ago.[6] Jim Boyle, an analyst with CL King, said the March results were especially ominous as radio was "up against easy comparisons" from last year, adding that second-quarter results "might very well be as discouraging as Q1's." The deepening decline prompted another analyst, Wachovia's Mari Ryvicker, to yet again lower her 2008 revenue forecast, revising it downward from a 1% decline to 2%.[50]
Ballmer said Microsoft is the global leader in e-mail and instant messaging, but in Internet search the biggest source of online revenue "we are the clear No. 3 in the market."[42] National advocates for Internet privacy view the showdown in the Connecticut General Assembly as a skirmish in the full-scale war between Microsoft and Google for dominance in the sphere of online marketing.[48] Standing squarely against its fiercest digital competitors, Microsoft Corp. is pushing a bill in the Connecticut legislature that would help consumers learn how Internet trackers compile personal information about them for purposes of targeted online advertising.[48] "This signals that the online advertising market is still healthy, which should help Yahoo get a better price for its company," said Peter Dunay, chief investment strategist at Meridian Equity Partners.[30] The news may put to rest fears that online advertising is beginning to feel pressure from the U.S. economic downturn.[31] In the absence of federal regulation of online data collection and advertising practices, several states, including New York, California, Utah and Illinois, have begun to consider state-level legislative remedies for consumers. • Require online third-party advertising networks to post notices about their data collection and how they use the personal data and data on Web site visits.[48]
There'''s a growing perception that the firm'''s growth strategy ''' everything from online video ads and office software to wireless communications ''' is a scattergun approach that has not yet established any meaningful new revenue streams.[26] Rosenberg said the campaign was only possible because publishers were adopting the plethora of new ad formats Google offered--including gadget ads, video and mobile--in addition to search.[11] Much like Google News, Live Search News delivers stories from a variety of different sources.[44] At present, Live Search News looks like a simplified version of Google News.[44]
The good news sent Google shares-which had fallen 35% since the beginning of the year-surging $75 in after hours trading. [24]
The owner of the most popular online search engine, said first-quarter profits rose to $1.31bn, up 30% from the same period a year ago.[3] Navneet has wide experience in natural search engine optimization, internet marketing and PPC campaigns. He is a prolific writer and his articles can be found in the "Best Articles" section of many websites and article banks. As a search engine analyst, he has over 9 years of experience and his knowledge is in application here.[36]
The joint website's entire search advertising would then be handled by Google as a third-party provider. [5] In the same manner as Google, Baidu.com advertisers are allowed to bid for keyword search result placement.[28] The share surge was driven by the first-quarter results Google made public yesterday.[22] Even more staggering, Google has enough cash on hand to buy all the outstanding shares of Baidu.com with money to spare. These differences, however, are really just quantitative not qualitative - in reality Baidu.com is very much the Google of China and its smaller size just reflects the less developed economic stage of China's Internet use.[28] Google'''s sky-high share price has wobbled in recent months, and key executives have headed for the door.[26]
The value of the deal, $44.6 billion when announced on Feb. 1, has slid to about $42 billion because of a drop in Microsoft's share price.[7] To counter that dominance, Microsoft offered in January to buy Yahoo in a cash-and-stock deal now valued at $42 billion.[33]
The company has twice rejected Microsoft's bid to buy the company for $31 a share.[7] The $26 a share bid, which had been set to expire at 11:59 p.m. Friday, was lowered to $25.74 because of the additional stock granted to management, Electronic Arts said.[45] Profit, excluding stock options, was a hefty $0.32 higher than consensus estimates, at $4.84 a share.[24]
DirecTV will pay $1.80 a share, or 80 percent more than 180 Connect's closing share price Thursday, the companies said Friday. 180 Connect said it has 27 million outstanding common shares and exchangeable shares.[45]
After the tepid response for Yahoo's search, Ballmer said jokingly: "Wow, we offered 31 bucks a share."[32]
Superior search technology will not protect any company during bad economic times, especially one whose principal business is advertising ''' and advertising based on complex mathematical formulas at that. It certainly faces stiffer competition, in large part due to its own expansion plans.[26] Go beyond Google and get vertical. These specialized search sites will help you find the business information you need -- fast.[46] A. Banerji wrote: Is absolute figure (Redhat v Microsoft) the only determinant of success? A redhat may die tomorrow, M$can also follow it's worthy predecessors of the 60s - ICL died. were they dealing in freeware? It's all about adaptive business model. If Google is still doing well today (with mostly freebies for the average user), it's got nothing to do with the meaningless free v patent controversy.[37] In the past month or so, the first indications that a fast-growing Google was not an inexorable law of modern business have seen confidence tumble.[26]
Google, which also opposes the deal, recently tapped Franklin Square Group LLC, run by two top Democratic lobbyists, to help with "competition issues in the Internet industry," according to a disclosure form. A message to one of the lobbyists was not returned while Google spokesman Adam Kovacevich said the company does not comment on its lobbying activities.[41] Google's showing indicates the Internet's advertising market remains robust.[23] Recent online industry figures suggested fewer people were clicking on Google's advertising.[49]
Activision, for example, used seven of Google's ad products when it launched Tony Hawk's Proving Ground last year.[11] Profits rose to around one billion Euros, a rise of 30 percent on the same time last year.[39] Sales rose 42 percent to $5.2 billion, writes CNN Money.[31] Excluding capital expenditures and other operating costs, the search giant posted a net operating income of more than $1.8 billion, with free cash flow at $938 million.[11]
"Combined with the rich browsing and integrated searching services delivered by Windows Live Toolbar and Live.com, the new search service offers customers the next generation of unified services."[47] Our advanced search service further allows you to set up customised RSS feeds based on the search queries. This allows you to track certain companies, for example, and be sure not to miss a thing. We also provide several pre-made RSS feeds and with a News Access subscription you will be able to click through to all these stories.[51]
Live Search News does not currently carry advertising, but it could in the future, Osmer said.[44]
In the meantime, rumors about a possible merger between Yahoo and AOL or of a joint takeover of Yahoo by Microsoft and News Corp have erupted.[31] Yahoo, one of the major players in the Web 2.0 space, stands on the brink of being acquired by Microsoft.[46] Web 2.0 Expo San Francisco 2008, running April 22 through April 25, kicks off as Yahoo, Microsoft, and dozens of startups jockey for position in this hotly contested arena. The Web 2.0 Expo San Francisco 2008, which runs April 22 through April 25 comes at an inflection point in this rapidly growing arena.[46]
The Web company struggles to decide whether it could remain independent or must surrender to an unsolicited takeover by Microsoft Corp.[33] The Redmond, Wash. -based company went public with a beta version of "Windows Live Search" and an updated toolbar at the Web site www.live.com. "We're unveiling a range of innovations that deliver an outstanding level of power and simplicity to search," the unit's vice president, Christopher Payne, said at a conference in southern California.[47]
Ballmer gave a muted report on Windows Vista the company's flagship operating-system product which, according to some analysts, faces a make-or-break year in 2008. "Windows Vista," he said, pausing for a moment, "a work in progress.[42]
More than half of the revenue came from outside the United States -- a first for the 91/2-year-old company.[1] The company earned more revenue abroad than in the U.S., partly due to a slump in the weak dollar.[39]
The group also said that UK revenues stood at ''402m in the quarter, 15 per cent of the group's total sales, up from 14 per cent at the end of 2007.[49] The growth rate of consumer clicks continues to slow, down from 30 per cent in the fourth quarter of 2007 and from about 50 per cent in each of the four quarters prior to that.[21]
In recent quarters, Yahoo has been struggling with growth and expense issues.[7]
"Investors appear to be ignoring the strength of Microsoft's underlying fundamentals," Thill wrote Wednesday. "We suggest investors take advantage of this temporary dislocation between stock valuation and fundamentals and buy Microsoft before investor attention returns to the strength of its core business." [8] Strong fundamentals and international revenue streams are meaningless if investors have no taste for tech or stocks in general.[8]
Microsoft Corp., the world's largest software maker, began testing a subscription pricing model for its Office software that gives consumers upgrades to new versions over the Internet. [45]
SOURCES
1. Google shares boosted by results - CNN.com
2. ITPro: Internet: News: Google's growth continues
3. tehran times : Google shrugs off ad sales fear
4. The Associated Press: Google shares soar 20 percent to record 1-day gain
5. Yahoo Advances To Make Deal With Google | eBrandz Search Marketing & Technology News
6. Google defies naysayers, Q1 profit jumps 30%
7. Judgment Day Nears In Yahoos Pursuit Of Higher Microsoft Bid
8. Early Tech Earnings Bode Well for Sector (Google, International Business Machines, Intel, Microsoft) at SmartMoney.com
9. Has Economy Hurt Google Search Ads? - WSJ.com
10. Google still cashing in
11. MediaPost Publications - Google Rides High On Strong First-Quarter Revenues - 04/18/2008
12. Business & Technology | Google profit, stock jump; investors gurgle with delight | Seattle Times Newspaper
13. Google still taking over the world - Media & entertainment - Management Today
14. Google stock climbs following strong quarter
15. Google profit leaps to surprise analysts - Business News, Business - The Independent
16. MediaFile » Blog Archive » Google! | Blogs | Reuters.com
17. For Yahoo, clock ticks down to Microsoft deadline | Special Coverage | Reuters
18. Free Preview - WSJ.com
19. UPDATE: Yangs Last Stand: Yahoo Earnings Could Sway Microsoft Deal
20. Google Says Ads Led Growth: Now What? » Adotas
21. reportonbusiness.com: Google overcomes slow economy, silences critics
22. KSBY 6 Action News, Weather, Sports: Covering California's Central Coast | Google shares soar 20% to record 1-day gain
23. Google's 1.3B profit tops expectations, stock leaps
24. MediaPost Publications - Google Beats Street (But News Isn't All Good) - 04/18/2008
25. Google CEO says Nice to be working with Yahoo | Technology | Internet | Reuters
26. Are the glory days over for Google? - Money Week
27. Google earnings prove webs not lagging in advertising dollars
28. Investerms.com - Baidu.com Basks in Googles Glow, Up Over 8% Ahead of Next Weeks Earnings
29. Online success - Scotsman.com Business
30. [H] Enthusiast -
31. Google's Q1 Trumps Wall Street Estimates - Media Buyer Planner
32. Microsoft jokes about Yahoo bid
33. Higher antitrust bar for Yahoo-Google- Hindustan Times
34. Nice Take on Web 2.0 Expo from Information Week - O'Reilly Radar
35. Free Preview - WSJ.com
36. Yahoo Google Test Successful A Giant Leap for Y
37. Viewpoint: Time for Open Source Software Vendors to Think Beyond Free @ OPEN WEB DEVELOPER'S JOURNAL
38. Microsoft CEO jokes about Yahoo bid - BizTech - Technology - theage.com.au
39. EuroNews EuroNews : Good for Google
40. Hartford Business
41. FOXNews.com - Microsoft hires firm to lobby on proposed Yahoo takeover - Science News | Science & Technology | Technology News
42. Microsoft | Ballmer points out Microsoft soft spots | Seattle Times Newspaper
43. Yahoo Search Marketing and Media Corp partner - Search Marketing - BizReport
44. Microsoft Strikes At Google With Live Search News | eBrandz Search Marketing & Technology News
45. Tid bytes :: CHICAGO SUN-TIMES :: Technology
46. Web 2.0 Expo Preview: Businesses Waking Up To Web-Enabled Apps -- InformationWeek
47. ADVANCE for Health Information Executives | Editorial
48. Hartford Business
49. Google beats advert fears - Scotsman.com Business
50. MediaPost Publications - Signal Failure: Radio Revs Fall 8% In March - 04/18/2008
51. Yahoo! close to outsourcing search advertising to Google - report - Telecompaper
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