The firm saw net income for the September quarter up 92% at $733.4m, on revenue of $2.69bn. Earnings per share of $2.36 was 20 cents better than analysts had been collectively predicting.
On the news, Google’s share price added 7.5% in after hours trading, enough to buy soon-to-be-acquired video sharing web site YouTube five or six times over.
While Yahoo! Inc’s recent poor performance could be taken as an indicator of how Google would have performed, that clearly isn’t the case this quarter.
Google chief executive Eric Schmidt even refused to tell analysts tracking the company whether he expects YouTube, bought last week for what now seems like a measly $1.6bn in stock, to be profitable, citing the firm’s no-guidance policy.
The company still refuses to give future financial guidance, leaving many observers begging scraps of color and scratching their heads to figure out whether search advertising growth has topped out yet.
While Google’s AdWords/AdSense business is clearly extraordinarily healthy, it is still the firm’s only material revenue stream, so Google is also focused on consolidating and monetizing some of its other products, those that are only peripherally connected to search.
Co-president Sergey Brin is leading the charge internally to consolidate its eclectic array of services. Having overseen an explosion of product development and acquisitions over the last few years, Brin is now keen to rationalize, turning products into features where appropriate.
What we are concerned about is that if we continue to develop so many new individual products that are all their assorted silos, you will have to essentially search for our products before you can even use them, he said, according to a SeekingAlpha.com earnings call transcript. And then you will have to search before you can do a search, in many cases.
One of the first efforts here will be to integrate Google Docs & Spreadsheets, itself comprised of two acquired services, into Google Apps for Your Domain, a suite of hosted applications that currently includes Gmail, Google Talk, Calendar and Page Creator, which were developed in-house.
Schmidt said there’s money to be made here: I think if you look at, for example, Google Apps for Your Domain, you can see that product as it becomes more successful could become, for example, a very significant source of revenue. In addition to that, the Checkout by Google product offers a tremendous revenue potential as well. Of course it is in the early stages.
Brin also said the company is planning to build a common back-end infrastructure for sharing documents, pictures and videos through the company’s various front-end services.
It would be nice to have the exact same way to share all those things, to have all that functionality available across all of those media types in the identical way, rather than developing sort of one-offs for each of those products, he said.
As for YouTube, details were vague because the deal hasn’t closed yet. Many watchers are concerned that the company could have exposed itself to costly litigation, given that most of YouTube’s popular content is ripped from copyrighted works.
But Google executives played this down, saying they are talking to the big copyright holders about ways to monetize and share revenue from such content. It has already emerged that several media companies took stakes in YouTube shortly before the Google acquisition was announced.
