Live: Google Realistic, But Optimistic
Let out that held breath, everybody – Google had a good third quarter. While the company didn’t destroy estimates as it’s done in the past, such behavior could hardly be expected at this point, and Google at least managed to improve its performance in most respects.
All of this led to some rather happy and enthusiastic behavior on the part of investors. Google’s stock has gone up 7.86 percent so far in after hours trading.
Here are notes from the live conference call:
Eric Schmidt, CEO
Sergey Brin, Cofounder
Patrick Pichette, Senior Vice President & Chief Financial Officer
Jonathan Rosenberg, Senior Vice President, Product Management
Hal Varian, Chief Economist
"Google had a good quarter. Traffic and revenue were both solid."
"As consumer budgets are squeezed, people use the Web."
"The DoubleClick integration is going very well."
"YouTube is now running ads against 90 percent of content."
"We’re going to keep a very close eye on costs . . . it’s the right thing to do."
"Scarcity builds clarity."
Over half of new hires are in engineering.
"We continue to invest in our core business both in the U.S. and internationally."
"Our hedging programs are in fact working well."
"Our cash flow hedges are designed to protect against the downside risk to earnings, not revenue."
"I’m pleased to report that operating cash flow remains strong."
"Our core business continues to demonstrate strength despite a challenging economic environment."
"This quarter we significantly increased the size of our index."
"Our data centers now use several times less energy than typical facilities."
"Search of course remains core to our business." More than one search improvement per day during the quarter.
"We’ve made about two dozen improvements to our content network during this past quarter."
"We’ve launched Street View in Japan and Australia and seen significant increases in usage there."
The G1, which Brin has been using as his primary phone for months, "really integrates Google’s services very nicely on the phone."
"Now we have over 1 million businesses using Google Apps."
"We’ve had dozens of universities and colleges deploy Apps."
"All in all, it’s been a very busy quarter at Google. . . . I appreciate all of you following it."
JP Morgan asks Schmidt about what economic trends he’s seeing. Schmidt: "We see fluctuations and they’re more complex than they appear." Varies by country and region. Varian plugs Search Insights: "If you look in the last weeks, there’s been this obsession with the financial markets." Calls the current situation a once in a lifetime event.
Citi asks if it’s possible that investments will be delayed. "Strategic investments are strategic investments" . . . there’s talk of being courageous but responsible. Brin on display ads: "We still see this as an area that’s ripe for development and innovation."
Bank of America Securities asks question to which Rosenberg responds: "Most of the benefit of the typical quality investsments are real very quickly."
Schmidt on Yahoo deal: "When we did the deal, we understood that the deal would both be controversial . . . and that there was a proper role for the legal review process." "With respect to the advertiser reaction, we’ve seen a balance of reactions."
Barclays Capital asks Brin about coverage getting too low. Someone other than Brin – Varian? – responds, "We’ve done a much better job of eliminating the bad ads." Now Brin agrees, adding "I should mention that we have made progress."
Merrill Lynch asks about mobile queries. Schmidt: "We’re seeing an explosion in mobile search volume."
RBC Capital Markets references eBay problems – "meaningful slowdown." Schmidt: "There’s so much uncertainty now in the financial markets . . . it’s very, very hard for us to give you a sense of what’s going to happen in retail or any other category." Varian: "When there is a recessionary environment . . . this potentially has something of an upside for Google." References "Wal-Mart effect."
Sanford Bernstein asks about the improvement in margins – avoided hiring or staff reductions? Someone: "Across all categories of expenses, people have been very diligent . . . We’ve continued to hire."
Jefferies asks about geolocal ad opportunity. Brin: "really big monetization opportunity." "We already have fairly substantial revenues from geolocal . . . this is a good chunk of our business." Rosenberg: "This is an area where we’re winning . . . Maps is the most popular mapping site in the world."
How often will the AdSense scoring system change? "We tend to be very dynamic."
Schmidt: "We have a duty and a responsibility to run Google well. We take a long term view. . . . We have the time and the patience to build a great future, which is what we hope will happen for everybody."
Google’s stock is now up 8.99 percent in after hours trading.