The Market

by Mike Masnick

Google Missed? No... The Analysts Missed

from the back-to-work dept

We seem to be one of the few sites that didn't mention the big "miss" by Google in its earnings, but that's because, honestly, it didn't seem like that big of a deal. The growth was still tremendous. The real issue was simply that the Wall Street analysts did a bad job predicting how Google would do -- which isn't that surprising, since Google made it clear from the beginning that, unlike many other firms, it wouldn't make too much of an effort to give Wall St. really detailed info for future estimates. In other words, the "problem" isn't Google's, but an over-anxious Wall Street who wanted to believe Google could continue to defy gravity. That's why it's good to see that the "miss" doesn't seem to concern most folks in Silicon Valley, who can see through the Wall Street prism to recognize that this "hiccup" has almost everything to do with forecasting, rather than problems within Google.

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    Mike (profile), 1 Feb 2006 @ 2:31pm

    Re: Not a Google issue?

    can you explain how a 4% drop in operating margin isn't a problem for Google? Controlling costs is one thing Wall Street has no control over...

    There are two separate issues here, so let me separate them out.

    First, there are plenty of reasons why there might be a 4% operating margin drop when you have a company that's not thinking quarter-to-quarter, and that's not necessarily worrisome. Honestly, while margins are important for profitability, the obsession over variance in margins is overblown.

    Second, and much more to the point... who cares? The point wasn't that Wall Street "had control" over everything that happened at Google. They obviously don't. But that it was Wall St. that set the expectations that weren't met... not Google.

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