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Google Financial News
January 27, 2006
Google is poised to announce it’s 4th Quarter results on 1/31/06 and everyone is eager to see how the search giant does. I have been reviewing the financial filings that Google posts on a regular basis and have been nothing but astounded by the actual results.
A lot of times all we hear about is the stock price. That’s important no doubt, but I also like to look at the internal workings of a company. Remember the old axiom, “numbers don’t lie�? Well, that’s the school of thought I’m in and I also know that stock price is only concerned with what you’re going to do for me in the future. In light let me give you some quick numbers from their September 2005 filing:
From 1/1/04 through 9/30/04 Google posted expenses of $1,820,329.
From 1/4/05 through 9/30/05 Google posted expenses of $2,771,829.
An increase of $951,500.
From 1/1/04 through 9/30/04 Google posted revenues of $2,157,722.
From 1/1/05 through 9/30/05 Google posted revenues of $4,219,168.
An increase of $2,061,446.
Basically for every dollar extra dollar they spent they made $2.17. Not too shabby.
Besides the commentary that says “hey they made more money, cool�, there is a deeper observation to be made. A basic axiom of good business is that you always want your revenues to increase at a faster pace than your expenses. In other words, make more money with the resources that you currently have – increase productivity – don’t incur unnecessary expenses. It sure seems that they are meeting this goal.
This result usually stems from good management. It can come from other means, but that is usually not a long-term thing. It will be interesting to see if this trend continues.
I will cover in my next post the question of what are they doing with all of this money since they don’t pay dividends out to shareholders. It will be an interesting look at their balance sheet.
All posts by Brent Sharp
posted by Brent Sharp at January 27, 2006 03:18 PM
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