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Thursday, January 21st, 2010

Google Does Great in 2009 But Will it Do Well in 2010?

 

On Thursday, Jan 21st, Google will be releasing its fourth-quarter earnings and stockholders are likely to be very happy with the results. That said, what will happen in 2010?

Google’s 4th Quarter Results Expected to be Great

In this Reuters article Kaufman Brothers analyst Aaron Kessler is quoted as saying, “the unofficial ‘whisper’ numbers among investors have Google’s fourth-quarter net revenue growing between 13 percent and 15 percent from the third quarter’s $4.38 billion.”

So just how well is Google doing in comparison to the markets? A chart showing Google's stock performance versus the Down Jones Internet stock and the Dow Jones Industrial Average - Google is above them all in Q4!First, you should know that it would be polite to call me a novice at finance, however, even I know that the “Holiday Lift” chart on the right (from this Wall Street Journal article) says volumes; in quarter 4 there is no doubt that Google saw significant financial growth as it far outpaced the Dow Jones Internet stock-market index.

Getting down to the brass tacks, Thomson Reuters StarMine estimates Google will be announcing a cool $4.92 billion in revenue in the 4th quarter alone (am I the only one in awe here?).

Here are some other facts that I found fascinating and perhaps you will too, if like me, you do not follow the markets closely:

  • Despite taking a hit during the recession like most of the world, Google actually beat the forecasts of Wall Street analysts for the first 3 quarters of 2009,
  • Google’s share price doubled in 2009,
  • The Wall Street Journal noted: “From Nov. 1 through Dec. 24, e-commerce sales were up 16% compared with the prior year, according to MasterCard’s SpendingPulse data.”
  • If Google follows-through with their threat to leave China, analysts estimate they would lose between $200 and $600 million… which accounts for just 1 to 2% of Google’s revenue.

Will Google be the Darling Stock of 2010? Possibly NO

Google's Nexus One smartphoneFrom what I have read (for heaven’s sake, don’t bank on me!) Google faces some stock peril over the coming months because of its foray into consumer electronics with the Nexus One smart phone. That doesn’t mean Google is not going to continue to perform well, however, if I were a betting man I would say Google’s stocks are in for a roller coaster ride in 2010 as the company faces the headaches associated with a marketplace they are so unfamiliar with.

Indeed, Google has also cheesed off Apple by jumping into the smart phone market. This rather dubious move has led to powerful rumors that Microsoft and Apple have been in talks for the past 3 weeks about changing the default search engine on Apple products from Google to Bing. Personally, I think such a change will just piss-off iPhone users more familiar and comfortable with using Google. That said, even if Bing takes any market share as a result, it will be largely irrelevant and just serve to escalate the schoolyard fight between Apple and Google.

In short, there are very interesting times ahead and I am very happy to be a bystander.

Please share your thoughts! Perhaps you think the upcoming consumer hardware with the Chrome OS will be enough to balance out any stock tremors?

by Ross Dunn, CEO, StepForth Web Marketing Inc.
Increasing the bottom line online for businesses since 1997


3 Responses to “Google Does Great in 2009 But Will it Do Well in 2010?”

  1. Scott Van Achte

    I find the idea of Bing being changed to the default engine on iphones kind of funny. Yes, it will seriously tick off Google, but when it comes down to market share I agree that it will probably have little to no impact. Why? Well, I may be wrong here, but I would assume that most people that buy iPhones are rather tech-savvy. Those who are tech savvy, probably don’t use Bing, and they also probably know how to change the default engine back to Google.

    I would love for Bing to give Google a run for its money, but honestly, as much as I hate to admit it, Google does deliver better results, and that’s what matters to me when I search.

  2. Nick Stamoulis

    I agree with Scott in the sense that the default search engine on the phone going to Bing is really not going to do to much to Google’s bottom line. It just continues the war between these corporate giants. What I do know is that everything that goes up has to come down sooner or later.

  3. Ross Dunn

    Hey Nick, thanks for the comment. I am with ya… it is just a pissing contest that is likely to get downright silly and the only people that will really suffer are the users. I suppose it could get bad enough that sales would suffer as well but that all depends on just how infantile Jobs will get; he is the one with the greatest temper – as I understand.

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