Turns Out That Google Isn't Infallible

from the miss! dept

Thu, Jul 19th 2007 5:36pm — Joseph Weisenthal

After quarters upon quarters of nearly flawless performance, Google has finally hit a speed bump. The company failed to meet Wall Street earnings expectations, owing to a combination of rapid hiring and unimpressive advertising sales. By the standards of any other company, this quarter would've been very strong, but since it's Google, it's held to a much higher standard. Still, the company is publicly putting on a brave face, claiming that things look bright going forward. Google's freewheeling hiring and spending shouldn't come as too much of a surprise to anyone, seeing as the company continues to aggressively recruit, all the while releasing a slew of new offerings. If the company's problems are as simple hiring too much, then the continued growth of its business should eventually make up for the extra overhead. But if the company's problems are deeper -- and some of the advertising woes suggest they could be -- then its management will be find itself in uncharted territories, as it tries to right the ship amidst a slowdown.

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Filed Under: search
Companies: google

16 Comments

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nonuser, 19 Jul 2007 @ 7:14pm

yeah, I wonder
when they'll reach a point that the insiders refer to as a "bozo explosion", and start cutting staff and perks.
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Google Fan, 19 Jul 2007 @ 7:41pm

As did Yahoo!
Google will succeed.
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Anonymous Coward, 19 Jul 2007 @ 7:48pm

Wall Street earnings expectations,
I find it interesting that companies are criticized for "failing to meet Wall Street earnings expectations".

It's plain that Wall Street got it wrong, as usual. Google didn't put forth any predictions that they later failed to meet.

Wall Street is full of crap and always has been. They do and say anything that will stimulate trading. Does the name Enron sound familiar?

They have all the answers about why something already happened, even though those answers vary - depending on who you ask.

Forget Wall Street expectations - just BS. Unless you like losing your hard earned money.
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DrRyan, 19 Jul 2007 @ 8:04pm

Earnings
I love it when companies do poorly compared to their Wall Street estimates. The company itself loses no value, but the stock becomes cheaper. Time to buy some more Google before it goes right back up to where it was.
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John, 19 Jul 2007 @ 8:05pm

Adwords
I'm putting together an AdWords campagn and to say that the website is disorganized and confusing would be an understatement. They should spend some time observing a webmaster/marketer trying to understand everything on their site. They try to hard to make things 'simple' and in doing so leave way too many questions unanswered. If I don't understand something completely, they're not getting my CC #. If I 'googleize' my website, and then have to wait weeks for the results to show up in their 'analytics' tool, it can only hurt them. I bet they get it right eventually though...
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Jason, 19 Jul 2007 @ 8:55pm

Ummmm....
DrRyan, what are you smoking? If the stock gets cheaper, then the company HAS lost value. You need to learn about the stock market. I'm far from an expert, but that's basic economics right there.
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- Strofcon, 19 Jul 2007 @ 9:20pm
  
  Re: Ummmm....
  I think he means to say that they company itself is not actually hurting, and thus their general value as a profitable, "grow-able" company has not diminished, though from a stock perspective it certainly has. I think he's got a good point though, in that just because their stock will drop/has dropped because of their "sub-par earnings" according to Wall Street, Google is still a ridiculously intimidating force and will continue to be so for a while. Thus, it makes sense to snatch a bunch of Google stock while you can at the low price, because their "value" by your definition is about to skyrocket once more, as soon as everyone figures out that failing to meet Wall Street's expectations does not mean the end of a company's profitability and growth.
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- Wolfger, 20 Jul 2007 @ 4:45am
  
  Re: Ummmm....
  No. The *stock* has lost value, not the company. There is a difference. The value of the stock is the publicly perceived value of the company. That's why you'll often hear market analysts refer to one stock or another as "overvalued" or "undervalued", meaning that the stock value does not accurately reflect company value.
  
  Failure to meet Wall Streets expectations is bad for stock value, but it really doesn't affect the company's value at all. Google is just as good or bad an investment as it was a month ago. If anything, it's actually better, since the stock valuation just took a hit.
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DayNovo, 19 Jul 2007 @ 9:43pm

Google misses, but does it tumble?
Google did indeed come up with a miss today - no doubt about it. But is it fair to state, as some reports have, that the stock "tumbled" after hours? For more consideration click here: http://sneakybusiness.typepad.com/sneaky/2007/07/google-misses-s.html
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Enrico Suarve, 20 Jul 2007 @ 12:52am

Google are just charting their own path
At least Google appear to have been continuing forward with their original plans rather than allowing themselves to be led by the high priests of Wall Street

A few companies I have worked for/with have gone the other path "oh no we can't continue with that expansion/program/innovation, its eating up too much of our profit and we will fail to meet city expectations". It has nearly always meant them coming off worse in the end, as they continually delay expansion until they can 'afford' it. The next step is usually what nonuser refers to as a 'bozo explosion' and that one's the death knell
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Haywood, 20 Jul 2007 @ 5:08am

I've been a Google fan boy from the start.
I do have a hard time forgiving them for screwing up Google Groups. They had a working news group reader, that people could actually use. They went in and screwed it up and called it an improvement. They improved it so much I doubt anyone still uses it.
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- Uncle George, 20 Jul 2007 @ 6:59am
  
  Re: I've been a Google fan boy from the start.
  They improved it so much I doubt anyone still uses it.
  Right.
  Those 2,000,000 to 3,000,000 messages on Usenet each day never come from Google. They all originate with EasyNews and Giganews.
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Anonymous Coward, 20 Jul 2007 @ 7:52am

F.E.A.R. among Wall Street
Simply put:
False
Expectations
Appearing
Real
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Reed Naylor, 20 Jul 2007 @ 11:45am

FEAR is the mind-killer
Did any of you guys read the articles on this? Not meeting estimates in this case is a sad joke:

"Excluding one-time items and stock option expenses, Google posted a profit of $1.12 billion or $3.56 per share. That was 3 cents per share short of Wall Street targets."

The estimates were based on the 29% growth google has maintained of the last several quarters. Their growth this quarter was just over 27%. In any other field or industry this would be a mind-boggling acheivement, but for Google: "it fell short of analyist estimates"

BTW, I bought 50 shares at $510 this morning and it is already back up $525. Thanks suckers, see you at $610.
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andy, 20 Jul 2007 @ 1:36pm

wait for it...
bill lerach will file a shareholder suit any second now....
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Freelance Employment, 22 Jul 2007 @ 7:24am

I agree with Reed
I agree with Reed. I don't trade stocks, I simply buy when strong companies had marginal quarters. Yahoo and Google just recently had quaters that helped earn a nice profit, among others.
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