Google beats estimates, acknowledges uncertainty

(MarketWatch) -- Google Inc. on Thursday posted a first-quarter profit that beat analysts' estimates thanks to continued spending by search advertisers and a clampdown on costs, helping bolster the impression that the company is weathering the economic downturn relatively well.

But while Google's shares rose immediately after the earnings announcement, they turned lower in late trading as investors absorbed news of the company's first-ever sequential decline in net revenue since it went public, and heard Chief Executive Eric Schmidt acknowledge that he sees no end in sight for the recession.
Mountain View, Calif.-based Google said its first-quarter net income rose to $1.4 billion, or $4.49 a share, from $1.3 billion or $4.12 a share in the same period a year earlier. The company said net revenue for the period ended in March came in at $4.07 billion. Excluding special items, Google said earnings for the quarter were $5.16 a share.

Analysts on average had expected Google to post earnings excluding special items of $4.93 a share and $4.08 billion in net revenue, according to data from Thomson Reuters.

The size of the difference between Google's actual profit and Wall Street estimates was a surprise, according to Signal Hill Capital Group analyst Todd Greenwald. "It was definitely better than expected on the bottom line," he said.

Schmidt, during a conference call, said that "Google had a good quarter," though he allowed that it's nonetheless "absolutely feeling the impact" of the down economy. The chief executive added "we don't know exactly when" the economy will turn around, while his finance chief, Patrick Pichette, cautioned the company won't necessarily be able to hold costs so low in future quarters.

Google's capital expenditures in the first quarter were $263 million, a significantly smaller portion of its sales than in prior periods. But Pichette called the quarter "the perfect illustration of the lumpiness of our [capital expenditures]," warning analysts against expecting the company to report such modest costs in coming periods.

While Google's net revenue rose compared with the period a year earlier, it also declined from the $4.2 billion reported in the prior period -- marking the first sequential decline since the company went public in 2004. That indicates that while it's held up during the recession better than many peers, Google is also seeing its business affected.

Shares of Google fell slightly to $388 in after-hours trading.

'Very, very conservative'
Google said its paid clicks, or the number of times users clicked on an advertisement and generated revenue for the company, grew 17% in the quarter compared with the period last year.

That beat many analysts' estimates, though Signal Hill's Greenwald noted a growing discrepancy between high paid-click growth and slowing revenue growth, indicating that the prices advertisers are paying per keyword on Google's search service are declining.

While advertisers may want to spend less, Google also indicated that it remains committed to austerity amid the downturn.
Schmidt noted that while Google finished the quarter with nearly $18 billion in cash and equivalents on its books, it is in no hurry to spend it. "Our view at the moment is to remain very, very conservative, and I don't think that will change any time soon," he said.

Pichette, however, emphasized that Google will continue to invest heavily in its core businesses -- and likely more heavily, in some respects, than it did in the first quarter. A project building a new data center in Finland, for example, was only temporarily halted during the quarter by the cold weather in that country, the finance chief said.


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FCC sets wireless sale rules

(Reuters) - That requirement will apply to the 22 megahertz spectrum to be sold to commercial providers and the agency set a suggested $4.6 billion minimum for those airwaves to be sold, according to the FCC.




However, the agency stopped short of a broader requirement sought by potential bidder Google Inc. that would force the winner to resell access to its network on a wholesale basis.


Read more at Reuters.com Government Filings News

Microsoft to provide advertising for Digg

(Reuters) - Microsoft replaces Google Inc. as Digg's provider of display ads, boosting the world's largest software maker's efforts to gain a stronger footing in the growing online advertising market.




The two companies said the three-year agreement would go into effect in the coming weeks. Financial terms were not disclosed.


Read more at Reuters.com Mergers News

Baidu Takes On `Don't Be Evil' Google, Short Sellers in Chinese Showdown

(Bloomberg) -- For Baidu.com Inc., the Google Inc.
imitator with a 58 percent share of the Chinese Web-search
market and a $5.9 billion market value to prove it, the battle
for dominance is just beginning.

At stake is the Internet market in China, the world's
second-biggest after the U.S. by users. Google is gaining
ground, if rising short interest on Baidu is any indication.


Read more at Bloomberg Exclusive News

Google to bid for U.S. airwaves if condition added

(Reuters) - The prospect of Google's participation in the auction escalates the debate over how the valuable airwaves should be used.




Ten days after Federal Communications Commission Chairman Kevin Martin floated a proposed set of rules for the auction, Google said it wants the FCC to require the winning bidder to offer to resell access to some of the airwaves to competitors on a wholesale basis.


Read more at Reuters.com Business News

US indexes sink as Google, Caterpillar falter

(Reuters) - U.S. stocks fell on Friday, with the Dow knocked off its 14,000-point perch and the Nasdaq down more than 1 percent, after bellwether stocks Caterpillar Inc. and Google Inc posted disappointing earnings.

Caterpillar, the maker of heavy construction equipment, said quarterly earnings fell more than expected due to a sharp drop in sales of diesel truck engines and weakness in North American construction. For details, see ID:nL20191126.


Read more at Reuters Africa

US STOCKS-Futures fall on Caterpillar, Google earnings

(Reuters) - NEW YORK, July 20 - U.S. stock index futures fell
on Friday, with the Dow poised to be knocked back below its
14,000 milestone, after bellwether stocks Caterpillar Inc.
and Google Inc posted disappointing earnings.




Caterpillar, the maker of heavy construction equipment,
said quarterly earnings fell more than expected due to a sharp
drop in sales of diesel truck engines and weakness in North
American construction. For details, see [ID:nL20191126].


Read more at Reuters.com Bonds News

Yahoo posts lower profit, gives weak 2007 forecast

(Reuters) - Shares in the Internet media company fell 4.2 percent in extended trade.




Jerry Yang, the company's co-founder who took the CEO job in a June management shakeup, promised a new strategic plan as he sought to convince investors he is open to change and able to take on rapidly growing rival Google Inc. .


Read more at Reuters.com Business News

UPDATE 2-Google to buy Web security co Postini for $625 mln

(Reuters) - NEW YORK, July 9 - Google Inc. said on
Monday it has agreed to buy Web-based security provider Postini
for $625 million, expanding its package of online applications
to compete with Microsoft Corp.'s Office.




Privately held Postini provides security and encryption
services, protecting instant messaging, e-mail and other
communications, to more than 35,000 businesses and 10 million
users worldwide.


Read more at Reuters.com Bonds News

UPDATE 1-Hambrecht, Google exec to form rival to NFL-report

(Reuters) - The league -- to be named the United Football League --
already boasts billionaire Mark Cuban, who owns the National
Basketball Association's Dallas team, among its owners, the
paper said.




Hambrecht, Google and Cuban were not immediately available
to comment.


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Google takes stake in genomics info startup

(Reuters) - Google said it had invested $3.9 million in the company, called 23andMe Inc., giving the Mountain View, California-based Google a minority stake in the start-up, according to a filing with the U.S. Securities and Exchange Commission.




The initial round of outside funding in 23andMe includes venture capital firms New Enterprise Associates and Mohr Davidow Ventures and Genentech Inc.


Read more at Reuters.com Business News