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It's Google's Turn Now

Discussion in 'More News from Your Google TV News Team' started by Rickaren, Jan 20, 2011.

  1. Rickaren

    Rickaren New Member Staff Member

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    Forget Apple -- It's Google's Turn Now

    Robert Holmes

    01/20/11 - 08:28 AM EST

    BOSTON (TheStreet) -- In a tech world fixated on everything that Apple(AAPL) does, it's easy to forget that Google(GOOG) is still in business -- and reporting quarterly earnings today.

    Apple
    hogged the media spotlight this week, first on word that CEO Steve Jobs would take another health-related leave of absence and then on a blowout earnings report.

    [​IMG]


    Google, on the other hand, hasn't been in the headlines, aside from its struggle with China over censorship and for its mishandled introduction of the Google TV set-top box.

    The key question for investors ahead of
    Google's fourth-quarter earnings results, due for release at the close of trading Thursday, centers on a big salary increase for workers. In November, Google took steps to retain employees by awarding $1,000 tax-free cash bonuses for the holidays as well as 10% salary increases across the board, effective Jan. 1.

    Google rewarded its employees richly in the fourth quarter, but what about the Internet search giant's shareholders?


    For investors concerned about the spending habits of Google, the reports of salary increases appeared to be more bad news. Google devoted $1.47 billion toward capital expenditures in the first nine months of 2010 -- $757 million in the third quarter alone. The fear is that Google's commitment to its employees and the costs of funding its projects will lead to less revenue trickling down to the company's bottom line.

    Philip Tasho, co-founder and chief investment officer of TAMRO Capital Partners, and Jerome Dodson, manager of the Parnassus Workplace Fund(PARWX), are less worried than most investors about Google's spending habits.

    Tasho, who runs an Alexandria, Va.-based firm with $1.4 billion in assets, says Google demonstrated that, while the company did spend more money to retain key employees in the third quarter, the company delivered big profits.


    "They realize it's a balancing act and that they need to invest in their own people to be as good as they are, but they also have to deliver for shareholders, too," Tasho says. "The lag in the stock price probably gave Google more of an impetus to put in more financial controls. They need to invest in the future, which is their employees, so I don't view it necessarily as a negative."


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  2. Rickaren

    Rickaren New Member Staff Member

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    Google earnings top analyst expectations; YouTube revenues double

    By Jim O'Neill
    Created 01/20/2011



    Google easily beat analysts' expectation for earnings in the fourth quarter, with EPS of $8.75, well above the forecast $8.09. Revenue, meanwhile, came in at $8.44 billion, which also topped estimates. Both numbers took a back seat to the news that CEO Eric Schmidt, who has been at the helm of the company since 2001, was being nudged aside, assuming the role of executive chairman of the search giant; he's being replaced as chief executive by co-founder Larry Page on April 4 (see related story [1]).


    Google's earnings were strong, but not as strong as rival Apple's, which reported a 71 percent increase in revenue in its most recent quarter. While Goolge has struggled to get its Google TV platform off the ground and has suffered through the woeful rollout of its Nexus One smartphone and its doomed social networking effort, Buzz, Apple has hit the jackpot with the iPhone and iPad.


    Nevertheless, Google's $8.44 billion in revenue was a 26 percent increase from the like period a year ago. Fourth quarter profit came in at $2.54 billion, up from $1.97 billion. As usual, Google Sites generated the bulk of revenue, some to-thirds, or $5.67 billion; it was a 28 percent year-over-year increase. For the year, Google had $29.3 billion in revenue, an increase over 2009 of 24 percent. New income for 2010 was $8.5 billion, up 30 percent from 2009's $6.5 billion.


    "Q4 marked a terrific end to a stellar year," said Schmidt.
    CFO Patrick Pichette, at the end of Thursday's conference call with investors, said YouTube revenues had more than doubled from a year ago. Citigroup analyst Mark Mahaney in March said he expected the video hub to generate about $945 million in revenue during 2010 [2], swelling to more than $1.1 billion by 2011.

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