Search maverick Google missed widely on Wall Street's earnings expectations for the quarter ended Sept. 30, 2004, its first quarterly financial report after launching its initial public offering.
Net income came in at $52 million, or $0.19 per share, compared with $20.4 million, or $0.08 per share, in 2003's third quarter. Net income before certain non-recurring items was $125 million or $0.45 per share, significantly below the $0.56 per share consensus expectation from analysts polled by Thomson First Call.
Google reported Thursday US$805.9 million in revenue in 2004's third quarter, an increase of 105 percent over the same quarter last year. Excluding traffic acquisition costs (TACs), which is revenue Google pays to its partners, revenue came in at $503 million, exceeding analysts' expectation of $456 million.
Google's stock (GOOG) started trading on Aug. 19 on the Nasdaq Exchange. Since then, the lowest price for the stock has been $95.96 and the highest $152.40. Its IPO price was $85.
The stock closed at $149.38, up 6.33 percent, on Thursday before the earnings report.
Google, based in Mountain View, California, and founded in 1998, generates most of its revenue from selling online ads that it serves up on its site and on the sites of companies in its ad network. The text ads are matched via relevant keywords to the content of pages or to search engine queries, so that an ad for basketballs would be tied to a page that mentions the term and would appear alongside relevant search results. These ads are commonly referred to as sponsored search ads.
Google, which gained prominence as the most widely used Internet search engine, has been expanding its reach both inside and outside the search market. In the search market, Google has launched special services and products, such as its recently announced desktop search application, its intranet search appliance, its Froogle comparison shopping service and Google Local service for narrowing Internet searches to a geographic area.
Other recent moves by Google in the search space have been the introduction of a beta version of Google SMS, which lets users of mobile phones and other wireless devices query the Google search index via short messaging service (SMS), and the official launch of Google Print, a program for publishers to have Google scan and index their books to make the content searchable through the company's search engine.
"It's clear to us that we have only begun work on our mission to organize the world's information and make it universally accessible and useful. Only a fraction of the world's information is indexed on our computers. We are perpetually working on ways to grow our indexes and developing new technologies for collecting and serving up the world's information," said Larry Page, co-founder and president of products, in a conference call to discuss the financial results.
Google is also actively reaching outside the search space. In July, it bought Picasa Inc., which makes software for organizing and managing digital photos and runs a peer-to-peer network for sharing digital photos. In April, it announced a Web mail service called Gmail, which is still in test mode. Last year, it acquired the Blogger Web log service when it bought Pyra Labs Recently, rumors have swirled that Google might be developing a Web browser and an instant messaging service.