Analyst Conference Summary

conference date: April 17, 2008 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2008 (1st quarter 2008)

Forward-looking statements

Overview: Apparently Google investors can't do medium. Elation and despair are the choices. Google did not do as badly as had been feared. The company is fine, it is the value of the stock that is questionable.

Investors should note that revenues are rising faster on a percentage basis that net income.

Basic data:

Revenues were $5.19 billion, up 7% sequentially and 42% from $3.66 billion year-earlier.

Net income was $1.31 billion, up 8% sequentially from $1.21 billion and up 31% from $1.00 billion year-earlier.

EPS (earnings per share) was $4.12, up 9% sequentially from $3.79 and up 30% from $3.18 year-earlier.

Guidance:

Does not give guidance.

Conference Highlights:

Results included DoubleClick acquisition from March 11, which was immaterial to the quarter.

TAC (traffic acquisition costs) were $1.49 billion, or 29% of ad revenue.

Non-GAAP numbers: operating income $1.83 billion. net income $1.54 billion. EPS $4.84.

Site revenues were $3.40 billion. Partner site revenues (AdSense) $1.69 billion.

International component of revenue was $2.65 billion.

Paid clicks grew 20% y/y and 4% sequentially.

Stock based compensation expense was $281 million.

Cash flow was $1.78 billion. Capital expenditures were $842 million, mainly for datacenters, servers, and networking equipment.

Cash and marketable securities ended at $12.1 billion.

Employees end of quarter numbered 19,156, up from 16,805 year-earlier. 1500 of the new employees were associated with DoubleClick. But about 10% of DoubleClick employees were laid off already in Q2.

My summary comment: Despite management's use of words like "incredible," Google has become boring. The moon is promised repeatedly, but the innovations produce no discernable revenues and often are services like those already offered by other companies. They even announced search improvements that appear to be copy-cats of Ask.com innovation. But there is no doubt that the cash cow is still healthy.

But I did catch up on InfoWorld while sort of listening to the conference.

Q&A:

Display ads? Feel they are in the position to become the worlds largest display ad provider.

Macroeconomic situation? Just do not see an impact, despite looking at it carefully. Believe if there is a negative impact, are well set up.

Mobile search and ads work very well in nations with good handsets and bandwidth, but U.S. and Europe are behind.

Seasonality? It varies by country. Also, if we are building market percentage in a nation, then that tends to hide seasonality. In nations where we aren't gaining further share, seasonality comes out again.

YouTube? They are working on matching up ads for YouTube to improve monetization.

Hoping to give DoubleClick advertisers access to AdSense networks.

China? Seeing market share growth and ad growth, although advertising is nascent there.

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