Stay on Top of Enterprise Technology Trends
Get updates impacting your industry from our GigaOm Research Community
Eric Schmidt started off Google’s earnings call by saying that the company is “seeing a lot of signs” in the industries it follows that business is rebounding. “We’re very optimistic about the future,” he said. “We now have the business confidence to invest heavily.” Google (NSDQ: GOOG) has already begun to ramp up hiring and will also invest in capital expenditures, along with acquisitions, he said.
As for the company’s quarterly results, Schmidt said several times that he “was very very happy.” That exuberance continued throughout the call, with Schmidt, along with other executives, talking up the prospects of Google’s various products, including YouTube, Android, and the forthcoming Chrome OS. It could also mark a sharp contrast with competitors Microsoft (NSDQ: MSFT) and Yahoo (NSDQ: YHOO), which are both expected to report declines in net income and sales when they report their earnings next week. Some highlights, after the jump.
— Mergers and acquisitions: Schmidt had said publicly that he was back on the acquisition hunt and he reiterated that Thursday, saying that Google was looking at making purchases “both large and small.” He outlined several potential acquisition areas for Google: In search, he said Google might pick up small businesses that have “very interesting” offerings in specific verticals; he also said Google might make purchases in display; and also to boost its Chrome browser and forthcoming Chrome OS operating system. As for larger acquisitions, Schmidt said there would have to be a “strategic rationale.” He said that they were “quite infrequent” historically and that the company made one every year or two.
— YouTube: For the second earnings call in a row, executives talked up the performance of the video site. Nikesh Arora, president of global sales operations and business development, said that more than 90 percent of the top 50 advertisers now run campaigns on the site. Executives reiterated that YouTube was on the “path to profitability in the not too distant future.”
— Chrome OS: Schmidt said that Google hopes to get the operating system out on the market later this year. “It’s not quite done,” he said. “Internal demos (show) it is a materially significant achievement in platform computing.” That should put to rest speculation that Google might rush it out ahead of Microsoft’s release of Windows 7 next week.
— Android: The number of mobile searches on Google jumped 30 percent, compared to the second quarter. Schmidt said that “Android adoption is literally about to explode … you have all the necessary conditions, so this is, of course, a very critical period.”
— Stock buybacks: Despite all the rosy statements above, don’t look for Google to start buying back its stock. Executives said that stock buy backs were currently not under consideration, noting that historically stock buybacks had not “achieved the objectives they set out (to accomplish).” They reiterated that the company’s cash pile — which reached $22 billion during the quarter — gave the company “operating and strategic flexibility.”
— Hiring: Executives said Google would “accelerate” the pace of its hiring. Half of the new jobs will be in engineering; the other half will be in other areas. They would not provide estimates for how much they expect the workforce to grow this quarter.
— Cost per click: Asked to explain the six percent decrease in cost-per-click, executives said the fall was related to changes in the value of the dollar — and also to the company’s expansion into developing markets where the average cost per click is be lower.
— Executive departures: Several top sales executives have left since the start of the year. In his remarks, Arora referred to the “transitioning” of sales executives — but praised his team for maintaining its “focus” despite their departures.