Searchin’ Is Our Business and Business is Good: Google Profits Beat Expectations

by Jeff Wiener on July 15, 2011

Google Inc. announced its second quarter results on Thursday and results were better than expected.

Shares went up over 10 percent at $594.50 in after-market trading after Google said its net income in the second quarter was $2.51 billion, up from the year-ago mark of $1.84 billion. Revenue for the quarter ending June 30, 2011, was $9.03 billion, up 32 percent from the same period last year.

Most of the revenue came out of Google’s core business of search advertising, proving that the company’s foundation is strong enough to withstand ventures down other avenues. Google’s social networking forays, for instance, can easily be absorbed by the company’s main weight. These profits prove it, giving more credence to Google+ and letting the company take some calculated risks.

A good part of Google’s current success has to do with the attitude the company developed in the period following the recession. Larry Page, Google co-founder and current CEO, brought about a focus of “more wood behind fewer arrows” and streamlined the company’s projects to focus on essentials. While there were a few missteps and privacy disasters, the company has rebounded quite nicely.

“We are very careful stewards of investor money,” Page said. “We’re not betting the farm on this stuff.”

Google does continue to throw money at things like driverless cars, but the company says that the spending in those “speculative” areas is relatively minor.

Page also illustrated that his company has a different sort of outlook on its multiple project strands, splitting them into three basic categories:

  1. Core search ad business
  2. Consumer products (YouTube, Android, Chrome, etc.)
  3. New products and local-based tools (Google+, etc.)

Viewing things in this fashion lets Google prioritize its spending and development budgets while keeping things reasonably organized.

It hasn’t all been wine and roses for Page’s company, however. They didn’t wind up on the winning team with respect to the remaining Nortel patents, something that could sting in the long term because Google’s not exactly swimming in high-end patents. With the expected ramping up of intellectual property lawsuits from the consortium that did win the patents, Google might want to brace itself for some time in court.

There’s also a series of antitrust investigations to endure and the ghost of past failures, like Google Wave, to take care of. But things are looking up overall at Google and, for Page, the timing couldn’t be better.

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Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

{ 1 comment }

absorbable sutures July 18, 2011 at 3:10 am

I think that with the debut of Google+, Google is looking to garner greater market share in a market that is the monopoly of Facebook currently. If Google turns out to be good, then Google can surely look at more profits in the coming years.

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