Google's Page delivers solid performance; Balances new products, discipline

Google CEO Larry Page allayed analyst worries about the company by changing the conversation from spending to new product launches while promising "tight financial management."
Written by Larry Dignan, Contributor

Google CEO Larry Page allayed analyst worries about the company by changing the conversation from spending to new product launches while promising "tight financial management."

In other words, Page positioned himself as an entrepreneurial engine of Google, but not one nutty enough to blow earnings on speculative things like robot-driven cars.

Going into Google's second quarter earnings report, most analysts were fretting about how many people the company would hire as well as never-ending spending on data centers.

Related: Google delivers blowout Q2; Page 'super excited' about Google+

Page, who barely appeared on Google's first quarter earnings conference call, walked the line between being entrepreneurial and disciplined. Page hung around for the Q&A period and overall analysts were comfortable with him. The upshot: You can expect analysts to gush again about Google.

Why is analyst support important? Blowout quarters buy a company to take a few shots. For instance, Google is taking on Facebook and Groupon. In some quarters, these investments would look like pure folly. But if Google is blowing out Wall Street estimates, analysts will cut Page a lot of slack.

Here are some key quotes from Page on the earnings conference call. Note how he plays the new product positioning off of the financial discipline role.

Page said:

Google+ is still in field trial with limited access as we scale the system. Users have to be invited and sign up for the profile in order to use it. However, the growth on Google+ has been great, and I'm excited to release some new metrics for you today. Over 10 million people have joined Google+. That is a great achievement for the team. There is also a ton of activity. We are seeing over 1 billion items shared and received in a single day. Our +1 button is already all over the Web. It is being served 2.3 billion times a day. So while we still have a lot of work still to do, we are really excited about our progress with Google+. Google+ is also a great example of another focus of mine, beautiful products that are simple and intuitive to use, and actually was one of the first products to contain our new visual redesign.

The purpose: Get analysts to talk about Google+ and stop worrying about margins.

Page said:

I see more opportunities for Google today than ever before, because, believe it or not, we are still in the very early stages of what we want to do. Even in search, which we have been working on for 12 years, there has never been more important changes to make. They said there is no money to be made in search over and above a bit of banner advertising. Most new Internet businesses have had that same criticism. Fast-forward to today. It feels like we are watching the same movie again in slow motion. We have tremendous new businesses being viewed as crazy -- Android. And actually have a new metric to report in Android of 550,000 phones activated a day. That is a huge number, even by Google's standards. Chrome is the fastest growing browser. We have over 160 million users. Now people rightly ask, how will we monetize these businesses? Of course, I understand the need to balance the short-term with the longer-term needs, because our revenues and growth serve as the engine that funds our innovation. But our emerging high usage products can generate huge new businesses for Google in the long run, just like search. And we have tons of experience monetizing successful products over time. Well-run technology businesses with tremendous consumer usage make a lot of money over the long term.

Purpose: Send Wall Street a brush back pitch and get them thinking for the long run.

Page said:

Overall, we are focused on long-term, absolute profit and growth, as we have always been. And I will continue the tight financial management we have had in the last two years, even as we are making significant investments in our future. I would like to finish on our people. Great companies are no greater than the efforts and ingenuity of their people. We are continuing to hire the best. Keeping them happy and well-rewarded is crucial to our future. Many of you will be interested in hiring, whether we hired a few hundred more or less than you expected this quarter. But we will optimize headcount for the long term and the opportunities we see. It's easy to focus on things that we do that are speculative, e.g., driverless cars. But we spend the vast majority of our resources on the core products. We may have a few small speculative projects happening at any given time, but we are very careful stewards of shareholder money. We are not betting the farm on this stuff.

Purpose: Google isn't going to go to Vegas with shareholder dough.

Bottom line: Page's performance worked out nicely.


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