Posted July 18, 2008 10:31 am by with 13 comments

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World PeaceHow many times do we have to read about this kind of “report”? What is wrong with a 39% rise in net income for a quarter? How can that number “disappoint” investors and cause a 10% drop in stock price after the announcement? Your answer: Analysts. Just look at the WSJ report from the 17th says to understand exactly how “poorly” Google performed.

Analysts are about details. After all, look at the root of the word and you can guess what kind of folks we are dealing with here (if you choose to go further with that one, be my guest ;-)). Funny thing is these folks are making projections based on data? WHAT DATA? Google is notorious (or maybe brilliant) for not giving guidance to these people. Of course, the danger there is that these folks have deadlines to meet and personalities to build. Oh, I’m sorry; they are acting in the interest of the shareholders. I keep forgetting that they all aren’t Mary Meeker-like in trying to build a personal net worth on hype and theory.

Phew. Sorry I sound mad but I am. How can you fault any company for the following results?

  • 39% jump in revenue from prior year’s quarter
  • US paid clicks up 19% from year before (but down 1% from last quarter)
  • They have ONLY added 448 employees in the quarter (how socially irresponsible of Google)

So what effect does this have on the internet marketers of world? Hopefully little in our day to day work. What could happen, however, is that if Google’s stock price suffers greatly due to these assumptions being masqueraded as projections that are not realistic Google may need to change focus. What that means is that they may have to start to work to “Please the Street” and we have seen what that can do to companies. Rash decisions that are short sighted due to short term pressure thus models change then who knows what?

What are your thoughts? Should Google “play the game” with Wall Street so this “disappointment” in tremendous growth is more palatable? Do they continue to turn their back on Wall Street and let the market truly decide?

Not for nothing, but if I was asked to be disappointed about a 39% year over year jump in revenue, I would play the “Aw, shucks, we should have done better” game all the way to the bank.