By Carl HoweGoogle stock took a hit Friday because they didn't exceed analyst estimates with their quarterly earnings Thursday. Given that I just wrote a positive piece about Google being the barometer of the Internet, I thought I would just briefing comment on what has changed in my thinking after the earnings announcement:
Nothing. Not a thing. If anything, Google is getting to be even more influential, not less.
Let's start with the earnings report. Analyst estimate consensus was that Google would earn $3.59 a share. The company "only" earned $3.56, excluding exceptional items. Revenue growth was "only" 58%, instead of the 60% that analysts were expecting. Earnings grew 28% as well.
Now that may sound like a miss -- until you compare it with other online companies. For example, Microsoft reported its quarterly earnings yesterday, and it's online business grew 19%. And in the process, it didn't earn any money -- in fact, it lost $239 million on revenues of $688 million. That's a nice hobby, but not anything that compares to Google's business.
A more fair comparison might be to Yahoo. They reported earnings this week too, and their revenue grew 2%, while their earnings declined 2% in the process. Again, they don't hold a candle to Google's results.
Bottom line: Even though Google's stock was down 5% Friday, don't be fooled by not meeting analyst expectations. Google doesn't provide quarterly guidance because they want the freedom to do whatever it takes to build their business. And even with this so-called miss, Google is outrunning and outgunning its competitors in leading the Internet economy.
Disclosure: Author has no position in GOOG