Google is feeling especially cocky today and who can blame “everyone’s favorite garage band”? Google CEO Eric Schmidt had the pleasure of announcing one-of-a-kind financial results to Wall Street in its Q3 earnings report conference call this afternoon; See “Is Google unstoppable? Q3 record performance defies market conditions.”The market and financial juggernaut that is Google inspired Mark Mahaney, Citigroup, to ask Schmidt why he is squandering “undervalued” Google stock as acquisition currency:
A really quick cash question: can you use cash in the future to make acquisitions? You are using your stock for the YouTube deal. Clearly, the stock seems to be undervalued. Wouldn't it be more ideal if you could give cash for those deals?
George Reyes, Google Chief Financial Officer:
Mark, with respect to the stock transaction, I think you should think of this as a one-off, one-time that we did. And going forward we're going to use cash.
Mahaney peers who ventured to probe into the pesky details supporting Google’s “undervalued” stock, however, were not favored with such direct answers from Google management. Below are representative exchanges.
Analyst Question from Robert Peck, Bear Stearns:
Eric, could you comment a little bit on the content deal that you signed right before the YouTube deal? Any pending litigation? Did any of the content providers take stakes in either Google or YouTube as part of those deals?
I'd rather not go into the specifics of those deals.
Analyst Question from Mary Meeker, Morgan Stanley:
George, any thoughts on TAC?
So TAC is actually moving in the right direction for us. I think if you have had a chance to look at the slides that we have put up, Mary, you will see that.
Well, the question related to TAC and video in the future.
Way too early to go there, Mary.
Let's go to our next question.
Analyst Question from Christa Quarles, Thomas Weisel:
I know you don't give guidance, but just a binary response is fine. Will YouTube be profitable or not profitable as you see it?
The question is easily answered; we don't give guidance.