Peter Kafka

Recent Posts by Peter Kafka

Waiting for the Economy to Bounce Back? So Is Google.

Waiting for the economy to come roaring back? So is Google. The search giant had a decent quarter, but not one that’s going to blow away Wall Street, or convince anyone that the economy is roaring back. But it’s an okay performance for a media company in a recession.

Top line for Google’s Q2 earnings: Net revenue of $4.07 billion and earnings of $5.36. The Street was looking for net revenue of $4.05 billion and earnings of $5.05.

CEO Eric Schmidt isn’t overly effusive: “Google had a very good quarter, especially given the continued macro-economic downturn. While most of the world’s largest economies shrank, Google’s year-over-year revenues were up 3%. These results highlight the enduring strength of our business model and our responsible efforts to manage expenses in a way that puts us in a good position for the economic upturn, when it occurs.”

Meanwhile paid-click growth was up 15 percent, and the company continues to clamp down on expenses: Google’s headcount actually shrank in the last three months, from 20,164 to 19,786 full-time employees.

I’ll be listening in on the call and occasionally updating here.

  • Schmidt: “Youtube is now on a trajectory we’re very pleased with.”
  • “Too early to tell when the recovery will materialize.”
  • CFO Patrick Pichette: Still hiring, but decrease in headcount came from previously announced layoffs.
  • Product SVP Jonathan Rosenberg: We’re focusing more than ever on power users.
  • Mobile monetization picked up, driven by smart phones. YouTube’s monetized views have tripled in the last year.
  • Sales boss Nikesh Arora: Small advertisers have stayed consistent during downturn, and larger advertisers who have been on sidelines are coming back.
  • Schmidt on Chrome OS: We’re talking to manufacturers about designing “products that are very, very exciting.” Will Chrome run on existing hardware? Available for download? Still to be worked out.
  • Was June soft? Schmidt: We generally don’t parse interquarter trends. On YouTube: Monetizing “billions of views” per months. [Nothing approaching real numbers or real context].
  • Arora: “Significant sellthrough” in markets where Google has YouTube homepage for sale. Next phase of YouTube sales emphasis will be preroll ads on short-form videos.
  • Arora on YouTube “trajectory” comment: We’re excited about getting pieces in place to drive this forward [i.e., not talking about numbers]. Customers accepting YouTube ads: “It’s becoming accepted user behavior where they’re going to watch premium content that people have invested in, they’re going to watch pre-roll ads.”
  • Is YouTube profitable? Pichette: We don’t give out economics. But in the not-too-distant future, we see it being very profitable.

Here again, per Citigroup’s Mark Mahaney, is a crib sheet for interpreting the results (click to enlarge):

google-cheat-sheet

And here are the slides from Google’s investor presentation:


2009Q2_google_earnings_slides


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