Updated: Google's second quarter earnings missed Wall Street estimates and executives moved to allay concerns about the company's ability to weather a dicey ad environment.
The search giant on Thursday reported net income of $1.25 billion, or $3.92 a share, on revenue of $5.37 billion excluding traffic acquisition costs (statement). Excluding charges, Google reported second quarter earnings of $4.63 a share. Wall Street was expecting earnings of $4.74 on revenue of $5.37 billion. A picture is worth 1,000 words:
Aside from an earnings miss a sequential decline in paid clicks couldn't have helped. However, let's put this in perspective. Most companies would kill for this quarterly performance.
On the company's conference call, executives said they were pleased with the quarter and reiterated that Google wasn't seeing big macroeconomic issues. The most notable item on the call was Google's analysis of economic conditions.
"We're very well positioned in a slowdown especially if it gets worse," said CEO Eric Schmidt, who added there would be "a flight to quality" if the economy tanked.
Hal Varian, Google's chief economist, talked about "a Wal-Mart effect" where consumers looking to save a few dollars will research and buy more goods online. Presumably these folks would use Google to save a few bucks.
Color me skeptical. Anyone that lived through the dot-com bust has heard these lines before and no company is immune if there's a recession. Nevertheless, I'd agree Google is better positioned than its peers.
Among the early highlights:
By the numbers (revenue includes TAC):
According to Citi analyst Mark Mahaney's cheat sheet, Google's results generally fell into the neutral to negative category.
A few slides to ponder:
Google revenue...
And traffic acquisition costs...