Google grows up; Restructuring tweaks signal end of adolescence

Google grows up; Restructuring tweaks signal end of adolescence

Summary: Google is growing up and tweaking its business on many fronts: It is closing up shop in some engineering centers, laying off recruiters, ending deals with contractors and killing projects that aren't delivering. Simply put, Google is acting like a real company.

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TOPICS: Google
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Google is growing up and tweaking its business on many fronts: It is closing up shop in some engineering centers, laying off recruiters, ending deals with contractors and killing projects that aren't delivering. Simply put, Google is acting like a real company.

googmgt1.pngAlthough some folks (Techmeme) will view these changes as bad news it appears Google is maturing. And that's a good thing. Another good thing: The myth of Google is going away. Who really bought that Google is invincible line of thinking? Google as recession proof? Not quite. Google as all things to everyone? Not really.

Google is human. Google is shuttering projects that don't work. So long Dodgeball, Mashup Editor Notebook, Catalog Search and Google Video uploads. Contract activity is being curtailed and recruiters are being laid off. Meanwhile, Google is consolidating its engineering outposts.

Why does Google's spate of disclosures in the last 24 hours constitute a positive development? Now we get to see what Google is really made of. You don't earn your corporate chops in a boom. Let's face it. When the profits are flowing Google could burp and people would fawn over it. A stock price north of $700 makes everyone look like a genius and you can go on engineering benders.

googchart5.png

In a downturn, companies show what they are about. My respect for Cisco wasn't sealed in the dot-com boom; it was sealed in the downturn as CEO John Chambers reloaded and transformed the business. And guess what? Cisco is doing it again as its rivals like Nortel implode. Simply put, Cisco is battle tested.

Will Google deliver? We'll see. Google's fourth quarter is expected to be solid and analysts are cautiously optimistic. Piper Jaffray analyst Gene Munster said in a research note that Google's paid clicks are tracking down in December and that may put pressure on the fourth quarter. He writes:

"Third party data suggests Google paid click volume for the December quarter is tracking down 5% q/q. We are modeling for Google's December quarter paid clicks to be up 2.5% q/q and we also note that the Street is thinking the quarter will be flat. We view the data as a slight negative to the December quarter as consumers appear to be continuing to search as demonstrated by strong query volumes, but are not clicking on paid links as frequently. We had expected paid click volume to hold up well, but expected conversions to fall, which would negatively impact CPC rates. While the paid click data does not contemplate CPC rates, our expectations for a sequential increase in the fourth quarter are tempered by the data."

Google, which reports its fourth quarter results next week, is expected to deliver earnings of $4.96 a share.

But the Google tale will be told over multiple quarters. Can Google adjust as cost per click rates fall? Can it curtail expenses and preserve profit margins? Can it invest in what will distinguish the company in the future? Can Google finally find another business to alleviate its dependence on advertising?

Grown up companies answer those questions. Now it's Google's turn. Welcome to the real world.

Topic: Google

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8 comments
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  • no more Google video upload damn

    Since they capped You tube. This will hurt some people.
    Randalllind
  • RE: Google grows up; Restructuring tweaks signal end of adolescence

    Its only common sense to expect lowering search volume, at least paid search. I expect in a down economy we may see an upsurge in natural or organic search volumes.

    www.nickjwest.com
    1seniram
  • Use scroogle.org and avoid Big brother....

    I do not use google I avoid it and use http://www.scroogle.org for everything...
    Christian_<><
  • RE: Google grows up; Restructuring tweaks signal end of adolescence

    Sub $300 stock's, and cutbacks on non core business.

    and you say this is a good thing, its clear you dont really "get it".

    Google is a web search company that makes it money from paid advertising revinue's.

    In an economic downturn (we're having one of them now) the first thing business will do is cut back on advertising.

    Google "plays" with other things but its main business is advertising therefore its at the whim of advertising budgets and people buying things.

    If the downturn continues to be present and get worse so will google.

    I dont mind, i dont like google and their "methods". their censorship in china their collecting and retaining of personal data, their willingness to "give away" your personal data to all and sundry.

    I dont trust them, and dont use them, i certainly NEVER click on their adds.

    They dont have anything else, they can try to rely on OPEN SOURCE model to make some money but thats a failed model, which is why engineering staff are going.

    Googlel is a "paper castle" it has no real assets apart from some data files and servers.

    So when business's abandon their advertising budgets, google will feel the pain. and will be one of the first to go in the long run.
    Aussie_Troll
    • No, Larry does Get It.

      So it should take you only one guess to figure out who does not get it. But I will be generous and give you three;)

      Larry has done a good job of throwing cold water on the line of thinking that infected far too many during the boom periods. He is quite right to stress the need to show your mettle during the hard times before you earn the title, "battle-tested".

      And guess what: one of the things battle-tested corporate leaders do is lead the company to develop other markets, to NOT rely on one cash cow alone. This can be very difficult to do, since everybody lines up to milk that one cow, forgetting that it won't give milk forever.

      But guess what: this [b]is[/b] one of the hallmarks of leadership: to successfully lead the unwilling to do what is necessary. In this case, that means developing other sources of revenue. If Brin and Page are half as good as the fawning press has claimed, then this is exactly what they will do: lead the company to develop these new revenuews.

      Of course, they would have set a far better example of leadership if they had pulled this off during the boom period, but there's no point in crying over spilt milk.
      mejohnsn
  • Visicalc

    Google is the visicalc of search...we have a whole century to work on the real problems in knowledge and trillions can be put to use in this area.

    Google is the first big public company...but it's time has passed...
    jabailo1
  • But hopefully staying innovative?

    Sure, they shouldn't sustain things that are duplicated (Google Video, superseded by YouTube, especially with the new HD formats) or unpopular (Notebook?) or relics (Catalog Search?). But I hope this is not an "end of adolescence" for the entire company, but just these lagging projects. They'll need to keep that adolescent spirit to continue expanding into new areas, like Android and Chrome (they don't have much more share left to take in search, really).
    AySz88
  • RE: Google grows up; Restructuring tweaks signal end of adolescence

    google laying of recruiters?
    they must have discovered this then...

    http://www.jobstaxi.com
    carol oh carol