I’ve done just a quick scan, and have taken a look at the after market trading (GOOG down 6% already since the bell, UPDATE now 12%), and the quarter doesn’t appear to have delivered on what the street wanted.
From my read, GOOG fell well short of EPS estimates (their GAAP $1.22/share, non-GAPP was $1.54, street was expecting $1.77 or so), and growth from Q3 was pretty shallow (relative to the seasonal blowout that I expect investors wanted and expected, given the share price).
This is not to say GOOG is going down the drain, or a bad company. It’s clearly the healthiest, best, most important Internet company right now. But it does seem to confirm my earlier suspicions they were worried about their growth, and that it wasn’t strong enough to meet the market’s incredible expectations given the share price.
I’ll tune into the conference call for kicks, this should make the folks over at Yahoo! feel a little better…
UPDATE: Listening into the call, and looking more closely at the results table (nice q-over-q presentation here) it’s clear that a whopper tax hit that they didn’t seem to foresee was the culprit behind non-GAAP EPS being off the mark by at almost $.20/share. But even without the tax hit, it’s clear that revenues and earnings would only have met, not exceeded, expectations, and that was not going to be enough to keep the stock flying in the mid-400s, with a P/E of over 90.
Overall, pretty positive presentation from the Google folks. Eric Schmidt and the CFO spent a lot of time talking about potential for the international market to fuel growth in the business. Having spent some time running an international consumer internet business (to be fair, one much, much, much smaller than Google’s) I, too, am bullish about growth.
But I’m not sure they should place too much faith there; they are already at 38% of total revenues for the int’l side, Google in Europe already has fantastic market share and can’t grow too much more, and there are many secular reasons why internet advertising is likely to remain smaller outside the United States for a while. After all, in “traditional media,” about half of all advertising spending is in the United States, mainly because so much of the worldwide consumer demand for products and services comes from United States consumers…
In the long term, Google is right to be bullish, but I think it will be a longer, harder slog than they are admitting.
It will be interesting, all-in-all, to see how the market digests all this news, that the tax hit was responsible for so much of the miss, but the fact too that they would just barely have met expectations even without the additional taxes, which in and of itself would have been a miss and a disappointment.