Google Sells Capital Ideas at Analyst Day
Google CEO Eric Schmidt first told the gathering of financial analysts that "principles matter, its part of what will be coming as we grow." Then he addressed his usual litany of issues and situations that Google will face in the coming months.
The dominant topic was how Google will make money in the future, and how it plans to spend the cash.
This years analyst day takes place a few days after George Reyes, Googles chief financial officer, revealed that Google expects its growth to slow over time. The remarks sent Googles share price tumbling over concerns about where the firm can find new revenue sources.
Reyes hinted that Googles capital spending in 2006 will be well in excess of $1 billion.
In 2005, Googles capital expenses were $838 million, and 2006 will be substantially higher, he said, adding that "the components of networking gear and data centers" composed a majority of 2005s spending.
Googles International expansion was another big issue, as Google tries to establish offices in lots of countries to build up new audiences.
With growth expected to slow, questions are also being raised about Googles capital expenses. The company is famously tight-lipped.
Google will "grow from Google.com and partners in the United States and internationally," Schmidt said during his opening address, then praised the markets in two Western European nations and in China, where Google has its largest overseas research and development center.
"The capital were spending builds sophisticated hardware designed by the best computer scientists to deliver on-margin better performance," Schmidt said. "Investment in capital gives us enormous leverage."
Alan Eustace, Google vice president of engineering, added later that Googles network of data centers is getting a lions share of the companys spending.
"We do not believe any competitor can deploy infrastructure faster or cheaper at our scale," he said.
At 70 engineers and counting, Google engineer Kai-Fu Lee said the China facility is Googles largest overseas center to date.
Aside from pressure from its investors, Google is also being challenged to grow by moves from rivals Yahoo and Microsoft.
Microsoft executives recently said the company plans to have a search engine better than Googles in six months.
Editors Note: This story was updated to include additional comments from George Reyes, Googles chief financial officer.
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