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    Home Applications
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    Google Earnings Soar in Opener

    By
    Matthew Hicks
    -
    October 21, 2004
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      In its first earnings announcement since going public, Google Inc. doubled its revenues and profits as advertising continued to climb on its Web sites and on those of its partners.

      Google on Thursday reported that revenues climbed to $805.9 million for the three months ended Sept. 30, a 105 percent jump from the same quarter a year earlier.

      Net income followed a similar rise, reaching $52 million, or 19 cents per share. That was more than double its net income a year earlier of $20.4 million, or 8 cents per share.

      “This company delivered on its commitments, the commitments we made when we announced we were going public,” Google CEO Eric Schmidt said during a conference call with analysts.

      Profits were higher after excluding a $102 million payment to settle a dispute with Yahoo Inc. and excluding stock-based compensation charges. The company said that without those nonrecurring expenses, net income was $125 million, or 45 cents per share.

      The record earnings follow Googles closely watched IPO in August, in which the company raised $1.7 billion.

      Google didnt provide any guidance on the performance it expects in future quarters. Its first earnings news did send its stock climbing higher. It closed at $149.38 a share on the Nasdaq exchange.

      Google derived almost 99 percent of its revenues from advertising during the quarter and reported a continued boom in its growth. But the company is more aggressively pursuing the enterprise market this year, executive have told eWEEK.com, where revenue is generated through the licensing of its search appliance.

      Advertising dollars come through Googles AdWords program, where advertisers bid for placement in ads that appear based on keywords entered during searches. Ads on its own sites generated 51 percent of the ad revenue, or $411.7 million.

      Next Page: Google execs say advertising demand not yet met.

      Ad Demand


      From its AdSense program, where partner sites display ads, Google gained 48 percent of its ad revenue, or $384.3 million. Google doesnt keep all of the money it gains from clicks on ads on partner sites. About 79 percent of the revenue from partner sites was returned through revenue sharing.

      Google executives acknowledged in the conference call that some financial analysts are concerned about the companys reliance on advertising. But they said demand for search-based advertising continues to be strong.

      “We do know that the amount of demand that exists for the kind of advertising we do is quite large and not met,” Schmidt said.

      Financial analysts repeatedly asked Schmidt, co-founders Larry Page and Sergey Brin, and chief financial officer George Reyes about the direction of products and the companys approach to gaining revenues from new offerings such as its Froogle shopping search, Gmail e-mail service and desktop search.

      /zimages/5/28571.gifRead more here about Google Desktop Search.

      They offered few new details about when any of their new offerings will move out of beta or significantly contribute to earnings. Schmidt said Google focuses first on meeting an end-user need with beta products before determining the revenue model.

      Asked whether Google will become more like a Web portal, such as rival Yahoo, Schmidt ruled out such a move.

      “Were not going to announce a portal strategy because were not going to do that,” Schmidt said.

      /zimages/5/28571.gifCheck out eWEEK.coms Enterprise Applications Center at http://enterpriseapps.eweek.com for the latest news, reviews and analysis about productivity and business solutions.

      /zimages/5/77042.gif

      Be sure to add our eWEEK.com enterprise applications news feed to your RSS newsreader or My Yahoo page

      Avatar
      Matthew Hicks
      As an online reporter for eWEEK.com, Matt Hicks covers the fast-changing developments in Internet technologies. His coverage includes the growing field of Web conferencing software and services. With eight years as a business and technology journalist, Matt has gained insight into the market strategies of IT vendors as well as the needs of enterprise IT managers. He joined Ziff Davis in 1999 as a staff writer for the former Strategies section of eWEEK, where he wrote in-depth features about corporate strategies for e-business and enterprise software. In 2002, he moved to the News department at the magazine as a senior writer specializing in coverage of database software and enterprise networking. Later that year Matt started a yearlong fellowship in Washington, DC, after being awarded an American Political Science Association Congressional Fellowship for Journalist. As a fellow, he spent nine months working on policy issues, including technology policy, in for a Member of the U.S. House of Representatives. He rejoined Ziff Davis in August 2003 as a reporter dedicated to online coverage for eWEEK.com. Along with Web conferencing, he follows search engines, Web browsers, speech technology and the Internet domain-naming system.

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