Marketing Pilgrim

Google has released its Q4 numbers–beating Wall Street expectations–and in the process has admitted that it can no longer continue to milk its fat search engine cow.

First, the boring stuff numbers:

• Google reported revenues of $5.70 billion in Q4, representing an 18% increase over Q4 2007 revenues of $4.83 billion and a 3% increase over Q3 2008 revenues of $5.54 billion.
• Google’s net income fell sharply to $382 million, or $1.21 a share, from $1.2 billion, or $3.79 a share, in the same period a year earlier.
• It it weren’t for writing down the value of its AOL and Clearwire investments by $726M and $355M respectively, Google would have seen net income of $1.62 billion–or 15 cents higher than the $4.95 per share expected by analysts.

By Peter Young

Depending on who you decide to subscribe to it appears to have been a bit of a mixed bag for search spend during the final quarter of 2008. Recent reports by both Covario and Efficient Frontier have both released slightly differing reports on how search has fared, however there is one consistency that seems to be common to be both—search in comparison to nearly every other channel appears to be holding its own, in what can only be described as extremely trying times.

According to a report by online analytics firm Covario, search spend actually ‘surged’ during the final quarter of 2008, 43% YOY increase over the same period in 2007—a 7.2% gain over 3rd quarter 2008 spending. Such figures are all the more impressive given the circumstances experienced during the latter part of last year. It however should be noted this report was based on 12 of Covario’s U.S.-based high tech and consumer electronics customers—and thus is fairly limited in terms of scope.

Winners: Congrats to:

• Woody Collins
• Matthew Lawson
• Powell Manson

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With all the bad economic news flying around including massive Microsoft layoffs, Intel’s first performance concerns in a long time and IBM job cuts, Apple had its best quarter ever as reported in the WSJ.

Steve Jobs let the world know and issued a prepared statement on Apple’s earnings.

Even in these economically challenging times, we are incredibly pleased to report our best quarterly revenue and earnings in Apple history,” the CEO said.

That’s to the tune of over $10 billion dollars. A big number for sure. Increased sales of Macs and iPhones led the charge in the fourth quarter but Apple is already advising that Q1 of this year may not be so great. Interestingly enough it’s not the business of Apple that is getting the most attention these days. In fact, it seems as if the great performance in otherwise dark days is an afterthought when compared to the news swirling around the health of Steve Jobs and the SEC’s interest in the whole situation.

We’ve got out hands on the full memo from Microsoft CEO Steve Ballmer to the company’s employees.

The full text is below, but I want to highlight some of the tough measure Microsoft is putting in place in order to reduce expenses:

To increase efficiency, we’re taking a series of aggressive steps. We’ll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We’ve scaled back Puget Sound campus expansion and reduced marketing budgets. We’ll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year.

I’m sure folks are glad to still have a job, but it looks like salaries will be frozen for the time being.

The full memo:

Microsoft missed Wall Street estimates for its quarterly earnings and announced it would cut 5,000 jobs, but I don’t believe either of these two factors play a major role in the 8% share drop this morning.

I’ll tell you why and then I’ll tell you what’s really accounting for the decline in PPS (price per share) today.

First, the earnings miss. OK, so MSFT missed Wall Street expectations by 2 cents and its profit dropped from $4.71 billion this time last last year to $4.17 billion. But, it’s overall revenue grew from $16.63 billion to $17.1 billion in the same period. So, that suggests that the money is coming in, it’s just that Microsoft needs to shed some excess baggage expenses.