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.

  • Top Rated Digital

    It’s all about expectations and greed. It doesn’t really seem to matter how well a company does. It seems to matter more if said company meets the expected performance results. Exceeding is of course acceptable 😉

    Top Rated Digital’s last blog post..What’s The Top Rated Canon Digital Camera?

  • Nicole Price

    Investors expect greater performance from them because of the commanding market share that they hold. The problem of being a market leader!

    Nicole Price’s last blog post..Make Your Party a Roaring Success

  • Fifty Studio

    Those freaking fortune tellers are half the problem right now with our economy. They speculate and then something disappoints and then $11 billion in wealth just disappears.

    Fifty Studio’s last blog post..American Idol tryouts for Salt Lake City, Utah

  • Warenwirtschaft

    Many of those analysts find their results at the bottom of a coffee-pot. Others use the bowels of pigs. No wonder the results are often wrong and ridicilous.

  • Erik

    Like I said in my other comment. This post may be appropriate for it. Can you say BUY BUY BUY on these guys?

    Erik’s last blog post..Surrounded by Freelance Entrepreneurs

  • Travel Point

    And ‘pleasing the street’ might not be the best path of long term business. We all know what finally happened to ENRON while it pleased the street for years.

    Travel Point’s last blog post..The Samba of Brazil

  • Goran Web Design

    It does not make logical sense that investors would not be “happy” with a 39% increase. @Top Rated, Expectations make sense.

  • AK

    Hi.. nice to meet you.. this is the link to my new site..
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    AK’s last blog post..Last Day

  • Web Marketing Man

    Sustaining growth like this is unrealistic, especially in the current economic climate. Maybe that is what is being anticipated by market analysts?

  • Pingback: Search Engine News » Only 39% Growth? Wall Street Demands World Peace from Google Next Time()

  • Nick Stamoulis

    How can investors want more? With the tough economic times, they should be very happy that there is this amount of ad growth.

    Nick Stamoulis’s last blog post..Blogging Tip: You Should Check Your Plugins After Upgrading

  • Portland Search Marketing

    I smell Enron. If they weren’t such a morally inclined company I’d be suspicious.

  • Millionaire

    i think google should do a social service and hire more people to do simple tasks… :)

    Millionaire’s last blog (Meet Rich People Online)