Archive for October, 2011

October 20, 2011

Google for investors with 3Q 2011 update

This post will focus on Google the corporate entity, and not a product review or news (or humor with pictures and video) that is my usual subject here In the GooglePlex.

Google for investors

Google, Inc. is listed as GOOG on the NASDAQ. The corporate website for Google Investor Relations is http://investor.google.com

Have a look at (and consider bookmarking) the Events and Webcast page of the Investor Relations website. I find that to be the most convenient way to check on the status of any Google corporate news or document releases.

Current status of Google as a going concern

Google released third quarter financial information last week, for the three months ending September 30, 2011. Revenue is up 33% over 3Q 2010, and profits have increased 26%.

Android logo pillow

Google Android close-up

Some analysts expressed concern over the recent acquisition of Motorola as well as the Google mobile phone product, Android. Patent-related troubles are the primary reason for that. The full length version of the official press release is always available to the public, straight from the source: Google Announces 3Q 2011 Financial Results.

The slide presentation* accompanying every quarterly financial announcement is posted on the Google Investor Relations site, which is probably the quickest way to get access to it. The 3Q 2011 slides [PDF] are there already, although XBRL data, which is of less general interest to the public, hasn’t been posted yet.

XBRL is an abbreviation for eXtensible Business Reporting Language. I don’t recall how quickly the Google 2Q 2011 XBRL files were posted. XBRL files are in ZIP format. They are part of recent financial reforms related to the Dodd-Frank bill. Publicly traded (exchange listed) companies are required to use XBRL for better standardization of financial reporting for regulatory compliance purposes. This is required of all companies, and does not reflect negatively on Google, who has a good record with the U.S. Securities and Exchange Commission. In fact, one of the most upbeat, unequivocally positive posts to emerge from that Dark Horse, Zero Hedge (some of whose dire predictions are coming true, reflecting present conditions rather well) is about Google. Yes, it would be fair to say that Zero Hedge is actually bullish on Google: Our Growth Projection For Google Is Intact and Performing Well.

Opinion from a corner of a foreign field that wishes it were in the GooglePlex

I’ll share some ad hoc thoughts of my own, not to be taken as investment advice in any way, shape or form. I am not licensed to recommend, act as adviser nor broker in any financial instruments. I own no shares of Google stock. Keep in mind that this is my Google hobby blog, so I am obviously biased in favor of the company. I love the green Android, he is so sweet and cute.

Google has spread itself thin. There is a rather dour but sober post over at Read Write Web by Jon Mitchell that alludes to such. But steps are being taken to address that. Many, myself included, mourn the September 2011 closure of Google Labs, and the wonderful projects it offered. Yet this is an example of how Google is taking action to focus on products that are most likely to generate revenue. And also most likely to help mainstream users.

One must remember that Google is not a public utility, nor a government agency. Google provides a great many services that have zero profit potential, such as free Google Code Hosting for open source projects, server space to house the Usenet bulletin boards of the past etc.

Customer service

Google is not perfect. Advertising remains a primary revenue source. To-date, Google AdSense and AdWords revenue was primarily from e-commerce customers who don’t require much in the way of user support. Google needs to improve its customer support, particularly as an enterprise provider of custom search solutions such as the Google Search Appliance, and most visibly, Google Apps.

Social

I am not too concerned about Google Plus and its competitive positioning versus Facebook. Google+ is new, has glitches, and may be of interest to a smaller subset of the population than Facebook. That’s okay though. Facebook is 100% about social (note that the Facebook Places project was discontinued). Facebook doesn’t try, nor need to be a search engine too. Similarly, it is great that Google offers social features, a nice “extra”. However, Google’s core business is search and information retrieval. Advertising revenue finances that, and social features facilitate advertising.

* Google quarterly earnings slide presentations all have a similar format and character. As an example, you can glance at the slide presentation that accompanied the 2Q 2011 Google announcement. I found it on Scribd, before I knew about the Google Investor Relations website. This is for the quarter ending June 30, 2011 (whereas the link in the paragraph above was for the most current 3Q data):