Turns Out That Google Isn't Infallible

from the miss! dept

After quarters upon quarters of nearly flawless performance, Google has finally hit a speed bump. The company failed to meet Wall Street earnings expectations, owing to a combination of rapid hiring and unimpressive advertising sales. By the standards of any other company, this quarter would’ve been very strong, but since it’s Google, it’s held to a much higher standard. Still, the company is publicly putting on a brave face, claiming that things look bright going forward. Google’s freewheeling hiring and spending shouldn’t come as too much of a surprise to anyone, seeing as the company continues to aggressively recruit, all the while releasing a slew of new offerings. If the company’s problems are as simple hiring too much, then the continued growth of its business should eventually make up for the extra overhead. But if the company’s problems are deeper — and some of the advertising woes suggest they could be — then its management will be find itself in uncharted territories, as it tries to right the ship amidst a slowdown.

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Companies: google

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Comments on “Turns Out That Google Isn't Infallible”

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16 Comments
Anonymous Coward says:

Wall Street earnings expectations,

I find it interesting that companies are criticized for “failing to meet Wall Street earnings expectations”.

It’s plain that Wall Street got it wrong, as usual. Google didn’t put forth any predictions that they later failed to meet.

Wall Street is full of crap and always has been. They do and say anything that will stimulate trading. Does the name Enron sound familiar?

They have all the answers about why something already happened, even though those answers vary – depending on who you ask.

Forget Wall Street expectations – just BS. Unless you like losing your hard earned money.

John says:

Adwords

I’m putting together an AdWords campagn and to say that the website is disorganized and confusing would be an understatement. They should spend some time observing a webmaster/marketer trying to understand everything on their site. They try to hard to make things ‘simple’ and in doing so leave way too many questions unanswered. If I don’t understand something completely, they’re not getting my CC #. If I ‘googleize’ my website, and then have to wait weeks for the results to show up in their ‘analytics’ tool, it can only hurt them. I bet they get it right eventually though…

Strofcon says:

Re: Ummmm....

I think he means to say that they company itself is not actually hurting, and thus their general value as a profitable, “grow-able” company has not diminished, though from a stock perspective it certainly has. I think he’s got a good point though, in that just because their stock will drop/has dropped because of their “sub-par earnings” according to Wall Street, Google is still a ridiculously intimidating force and will continue to be so for a while. Thus, it makes sense to snatch a bunch of Google stock while you can at the low price, because their “value” by your definition is about to skyrocket once more, as soon as everyone figures out that failing to meet Wall Street’s expectations does not mean the end of a company’s profitability and growth.

Wolfger (profile) says:

Re: Ummmm....

No. The *stock* has lost value, not the company. There is a difference. The value of the stock is the publicly perceived value of the company. That’s why you’ll often hear market analysts refer to one stock or another as “overvalued” or “undervalued”, meaning that the stock value does not accurately reflect company value.

Failure to meet Wall Streets expectations is bad for stock value, but it really doesn’t affect the company’s value at all. Google is just as good or bad an investment as it was a month ago. If anything, it’s actually better, since the stock valuation just took a hit.

Enrico Suarve says:

Google are just charting their own path

At least Google appear to have been continuing forward with their original plans rather than allowing themselves to be led by the high priests of Wall Street

A few companies I have worked for/with have gone the other path “oh no we can’t continue with that expansion/program/innovation, its eating up too much of our profit and we will fail to meet city expectations”. It has nearly always meant them coming off worse in the end, as they continually delay expansion until they can ‘afford’ it. The next step is usually what nonuser refers to as a ‘bozo explosion’ and that one’s the death knell

Reed Naylor says:

FEAR is the mind-killer

Did any of you guys read the articles on this? Not meeting estimates in this case is a sad joke:

“Excluding one-time items and stock option expenses, Google posted a profit of $1.12 billion or $3.56 per share. That was 3 cents per share short of Wall Street targets.”

The estimates were based on the 29% growth google has maintained of the last several quarters. Their growth this quarter was just over 27%. In any other field or industry this would be a mind-boggling acheivement, but for Google: “it fell short of analyist estimates”

BTW, I bought 50 shares at $510 this morning and it is already back up $525. Thanks suckers, see you at $610.

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