Wall Street frowns on ginormous Google profits

Sergey grabs the knob


Google's ginormous second quarter profits didn't quite match Wall Street expectations, driving share prices down as much as 7 per cent in after hours trading. But it sounds like Sergey Brin will soon crank that big dial on the company's secret money machine, making everything A-OK in Q3.

In Q2, the world's largest ad broker nabbed revenues of $5.37bn, a 39 per cent leap from the same quarter last year and 3 per cent climb from Q1. "We're obviously very pleased with what we believe are good results in one of the weaker quarters in our normal yearly cycle," CEO Eric Schmidt said, during a conference call with reporters and industry analysts - in his usual haughty monotone. "Traffic and revenue was strong across all regions and verticals...despite uncertain economic conditions."

Meanwhile, profits hit $1.25bn. That's a 35 per cent jump from the same quarter last year, but it's a slight dip from Q1 - and it wasn't enough to satisfy the financial guess men. Google delivered $4.63 a share in earnings, and all those dart-tossing Wall Streeters predicted $4.74.

Lameduck CFO George Reyes indicated that some dollars were lost because of Google's "continued focus on delivering high quality traffic to advertisers." Paid click rate continues to decelerate, but Google has always said this is part of a grand scheme to improve the "relevance" of its online ads. In Q2, total paid clicks - across Google-owned sites as well as its content network - grew 19 per cent from last year, but they dropped slightly from Q1.

At the same time, the company says, ad "coverage" has dropped over the last few quarters, meaning fewer and fewer ads are being shown. "This is our continued focus on quality, and I don't see that changing significantly," said senior vice president for product management Jonathan Rosenberg. "[Co-founder] Larry [Page] often says we'd be better off showing just one ad [per page] - the perfect ad."

But Rosenberg was quickly contradicted by Sergey Brin, co-founder number two. "There is some evidence that we've been a little bit more aggressive in decreasing coverage than we ought to have been," Brin said. "We've been reexamining some of that."

Of course, like Rosenberg, Brin said he's merely interested in keeping web users satisfied. "Our ads are an important addition, quality wise, to our pages. They're a very important source of information." But we all know that Google is long way from displaying nothing but "relevant" ads on every page. We all know that more coverage means more money. And you can bet that next quarter, Sergey will make sure those Wall Street guess men get exactly what they want. ®

Similar topics

Broader topics


Other stories you might like

  • Google has more reasons why it doesn't like antitrust law that affects Google
    It'll ruin Gmail, claims web ads giant

    Google has a fresh list of reasons why it opposes tech antitrust legislation making its way through Congress but, like others who've expressed discontent, the ad giant's complaints leave out mention of portions of the proposed law that address said gripes.

    The law bill in question is S.2992, the Senate version of the American Innovation and Choice Online Act (AICOA), which is closer than ever to getting votes in the House and Senate, which could see it advanced to President Biden's desk.

    AICOA prohibits tech companies above a certain size from favoring their own products and services over their competitors. It applies to businesses considered "critical trading partners," meaning the company controls access to a platform through which business users reach their customers. Google, Apple, Amazon, and Meta in one way or another seemingly fall under the scope of this US legislation. 

    Continue reading
  • Makers of ad blockers and browser privacy extensions fear the end is near
    Overhaul of Chrome add-ons set for January, Google says it's for all our own good

    Special report Seven months from now, assuming all goes as planned, Google Chrome will drop support for its legacy extension platform, known as Manifest v2 (Mv2). This is significant if you use a browser extension to, for instance, filter out certain kinds of content and safeguard your privacy.

    Google's Chrome Web Store is supposed to stop accepting Mv2 extension submissions sometime this month. As of January 2023, Chrome will stop running extensions created using Mv2, with limited exceptions for enterprise versions of Chrome operating under corporate policy. And by June 2023, even enterprise versions of Chrome will prevent Mv2 extensions from running.

    The anticipated result will be fewer extensions and less innovation, according to several extension developers.

    Continue reading
  • I was fired for blowing the whistle on cult's status in Google unit, says contractor
    The internet giant, a doomsday religious sect, and a lawsuit in Silicon Valley

    A former Google video producer has sued the internet giant alleging he was unfairly fired for blowing the whistle on a religious sect that had all but taken over his business unit. 

    The lawsuit demands a jury trial and financial restitution for "religious discrimination, wrongful termination, retaliation and related causes of action." It alleges Peter Lubbers, director of the Google Developer Studio (GDS) film group in which 34-year-old plaintiff Kevin Lloyd worked, is not only a member of The Fellowship of Friends, the exec was influential in growing the studio into a team that, in essence, funneled money back to the fellowship.

    In his complaint [PDF], filed in a California Superior Court in Silicon Valley, Lloyd lays down a case that he was fired for expressing concerns over the fellowship's influence at Google, specifically in the GDS. When these concerns were reported to a manager, Lloyd was told to drop the issue or risk losing his job, it is claimed. 

    Continue reading
  • UK competition watchdog seeks to make mobile browsers, cloud gaming and payments more competitive
    Investigation could help end WebKit monoculture on iOS devices

    The United Kingdom's Competition and Markets Authority (CMA) on Friday said it intends to launch an investigation of Apple's and Google's market power with respect to mobile browsers and cloud gaming, and to take enforcement action against Google for its app store payment practices.

    "When it comes to how people use mobile phones, Apple and Google hold all the cards," said Andrea Coscelli, Chief Executive of the CMA, in a statement. "As good as many of their services and products are, their strong grip on mobile ecosystems allows them to shut out competitors, holding back the British tech sector and limiting choice."

    The decision to open a formal investigation follows the CMA's year-long study of the mobile ecosystem. The competition watchdog's findings have been published in a report that concludes Apple and Google have a duopoly that limits competition.

    Continue reading
  • End of the road for biz living off free G Suite legacy edition
    Firms accustomed to freebies miffed that web giant's largess doesn't last

    After offering free G Suite apps for more than a decade, Google next week plans to discontinue its legacy service – which hasn't been offered to new customers since 2012 – and force business users to transition to a paid subscription for the service's successor, Google Workspace.

    "For businesses, the G Suite legacy free edition will no longer be available after June 27, 2022," Google explains in its support document. "Your account will be automatically transitioned to a paid Google Workspace subscription where we continue to deliver new capabilities to help businesses transform the way they work."

    Small business owners who have relied on the G Suite legacy free edition aren't thrilled that they will have to pay for Workspace or migrate to a rival like Microsoft, which happens to be actively encouraging defectors. As noted by The New York Times on Monday, the approaching deadline has elicited complaints from small firms that bet on Google's cloud productivity apps in the 2006-2012 period and have enjoyed the lack of billing since then.

    Continue reading
  • Google offers $118m to settle gender discrimination lawsuit
    Don't even think about putting LaMDA on the compensation committee

    Google has promised to cough up $118 million to settle a years-long gender-discrimination class-action lawsuit that alleged the internet giant unfairly pays men more than women.

    The case, launched in 2017, was led by three women, Kelly Ellis, Holly Pease, and Kelli Wisuri, who filed a complaint alleging the search giant hires women in lower-paying positions compared to men despite them having the same qualifications. Female staff are also less likely to get promoted, it was claimed.

    Gender discrimination also exists within the same job tier, too, the complaint stated. Google was accused of paying women less than their male counterparts despite them doing the same work. The lawsuit was later upgraded to a class-action status when a fourth woman, Heidi Lamar, joined as a plaintiff. The class is said to cover more than 15,000 people.

    Continue reading

Biting the hand that feeds IT © 1998–2022