Google "blithely insisted that all was well" during its second quarter earnings call on Thursday, but investors begged to differ, sending shares plummeting in after-hours trading after the company
missed The Street's earnings-per-share estimates by nearly ten cents per share. Unlike other companies, Google has decided not to offer any guidance in advance of what its sales and profits will be,
which it makes it more difficult for Wall Street analysts to forecast the company's quarterly results. The strategy has proven to be a double-edged sword for Google in the past.
Hal
Varian, Google's chief economist, admitted softness in certain ad categories like auto lending and real estate, but said that other economically sensitive were holding up, like home appliances. "We
have a little bit of the Wal-Mart effect going on," he said. "As times get tough, people will watch their dollars, and in many cases, that means doing more shopping online."
Meanwhile,
Jonathan Rosenberg, Google's senior vice president for product management, suggested that Google's problems were its own doing. The company has consciously cut back on the percentage of Web pages on
which it shows ads, bringing that figure to an all-time low. With that in mind, growth of 39% isn't all that bad. Even so, it's a "puzzling decision" says
The New York Times' Saul Hansell, who
says that "virtually any other company facing slow economic times would be interested in
increasing the places in which it could sell ads" (see: Yahoo). Rosenberg said there were no plans to
increase ad coverage.
Read the whole story at The New York Times »