Advertising booms for Google, as they report earnings of $1.29 a share

By Richard Koman - April 21, 2005

GoogleDollars.jpgWith cofounder Sergey Brin proclaiming their advertising model, "very powerful," Google announced the results of a successful first quarter today. Net income was $369m or $1.29 per share, compared to $64m or 24 cents per share a year ago. The search giant had net revenues of $1.2 billion, a whopping 93 percent improvement over a year ago.

"Our advertising model is a beautiful thing; and we're certainly going to extend it as far as we can," Brin said in the quarterly conference call.

While the numbers were stronger for Google's own properties (which made $657 million in revenues, a 166% boost over year-ago numbers), the AdSense numbers ($584 million, a 75% increase over last year) are nothing to sneeze out.


The wild card of profitability in the network model is the "traffic acquisition costs," or TAC, as Google calls it, which is the amount of money paid out to publishers on the network, as well as larger partnership deals. The TAC number was $462 million, which brings total revenues down to $794 million before other operating expenses.

One big piece of the TAC was Google's relationship with AOL Europe, which enabled Google to increase international revenues from 35% to 39%. In the quarterly conference call with analysts, CEO Eric Schmidt said, "Unlike overall GDP growth in Europe, internet adoption is growing very fast. We're looking for very strong growth in Europe."

TAC (Traffic Acquisition Costs), the portion of revenues shared with Google’s partners, increased to $462 million. This compares to total payments to partners of $271 million in the first quarter of 2004.

The quarter's traffic acquisition costs amounted to 79% of revenues, up from 77% last quarter; but Larry Page emphasized that these costs fluctuate substantially from quarter to quarter. In any case, he said, TAC was very low as a percentage of revenue in Q4 because revenue grew so rapidly that quarter.

Google's leaders also emphasized that the advertising business is historically strong in the first and fourth quarters, and weak during the summer quarters; and that analysts should expect Google's business to follow that trend.
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By Richard Koman - April 21, 2005 | Permalink | Comment | Category: Google [GOOG]
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Comments (1)

Juan:

Google grows for that there are many places carrying out publicity or selling products integrated with Adsense. for example see:
googlecash.com and
createbusiness.biz/phplinkdirectory.html

Posted: April 25, 2005 6:46 AM