Google Third Quarter Report

Reading and listening to the financial reports of major corporations can be a challenging experience but it is earnings week in the search engine sector and a flurry of fiscal facts are being released. Earlier this week, Yahoo released disappointing third quarter results. Yesterday, it was Google’s turn and it quickly became apparent where much of Yahoo’s net-profits have gone.

Google posted stunning numbers yesterday. Reporting revenues of $2.69 billion for the three-month period between July 1 and September 30, Google saw a 70% increase over Q3-2005 revenues. Google’s net income in the third quarter of this year was $733 million, up 92% from last year’s figure of $381 million.

Google shares rose 7.5% to $458 in early trading on the Nasdaq board with investment analysts predicting the stock could rise as high as $595 over the next twelve months. In what Goldman Sachs analyst Anthony Noto calls a major understatement; CEO Eric Schmidt said Google, “… is not seeing a slow-down. It seems as strong as it has ever been, if not stronger.”

Google’s rivals are placed so far behind the concept of “The Big3” is virtually shattered. There’s not much more to say. Google continues to rule and the lead it enjoys on Yahoo and Microsoft defies competition.

Try to imagine the scene at the Googleplex yesterday as Eric Schmidt outlined Google’s great fortune. In my vivid imagination, it sort of plays out like this…

Dateline: Mountain View CA. Oct 19, 2006
Googlatopia

Peering up from behind piles of greenbacks, Google’s CEO Eric Schmidt smiled at the array of financial analysts and reporters arranged in a semi-circle around the dais he stood at. The smell of money overwhelmed the usually pungent tone of cheap cologne, dime-store perfume and deadline induced sweat generally associated with the media. Google is awash in money leading to rumours of back-room bathtubs in which Google executives can actually wash in it.

“This is totally amazing,” said Schmidt his eyes widened to emphasize the point. “To tell the truth, we’ve given up counting the stuff numerically, preferring to sort it into denominations and have our staff weigh every pile they come across in the hallways.” Being a modern company, Google uses the metric system and counts its money by the kilogram. “Those piles or, as we call them, super-stacks, can appear magically at almost any time during the day, in any one of our buildings around the globe. It’s really bizarre.”

Schmidt paused to survey the room. Silence. It was as if the press was stupefied, transfixed by the money, amounts of which we rarely get to write about. One can’t adequately describe the feeling without using words like reverential, mystical, dare one say it… spiritual. It really feels like there is a kind of magic at play. Success on the scale of Google has its dangers though, presenting situations no rational person would believe unless witnessed with their own eyes.

“We almost lost a group of interns when a super-stack materialized exactly where they had just been standing,” Schmidt continued, “Wow! When you analysts ask what keeps me awake at night, I think of trying to explain to some poor kid’s parents how he or she got crushed, or, as our new health plan says, compressed, at work.”

As Google’s financial reports were unraveled before the crowded room, random whooshes could be heard in hallways and from the expansive campus courtyard. Google employees long-ago got over the glee of seeing money appear out of thin air. For some, the money seems to be more of an annoyance, if not a constant distraction. It keeps them on their toes at any rate. As Google’s chief safety officer, Mr. McGruff explains, “The concept of the open office environment is quite important to the safety and security of every Googler. What would happen if a pile of money suddenly materialized in a normal 10X10 office? Good people could be lost and that’s always sad.”

During the course of the earnings conference, two huge super-stacks appeared in the cavernous pressroom, one of which nearly knocked over a CNN reporter, causing her to jump back. SearchEngineJournal editor Loren Baker lost his glasses when another super-stack suddenly appeared two feet in front of him.

Google’s Chief Financial Officer, George Reyes, told the gathering that super-stacks were forming with increasing frequency and that his main concern going forward into the fourth quarter was finding a way to get all the money safely to the nearest bank. “We might have to buy a fleet of armored cars,” mused Reyes adding, “… the overtime we’re paying for third-party money delivery is cutting into our revenues.” Mr. Reyes was unavailable for further comment after a third super-stacked pile of money suddenly enveloped him, effectively ending the press conference.

As we left the Googleplex, I could have swore I heard someone yelling, “Money party” over and over again.