Google’s future brilliant business in the mobile industry
Last week, Google reported strong increases in profit and revenue in the third quarter, during which the company had good results in both its core and emerging businesses. As a summary, Google generated total revenue of $7.29 billion in the quarter, ended Sept. 30, 2010, up 23% year-on-year. Subtracting commissions and fees it pays to ad network and other partners, revenue was $5.48 billion, $23 million above the consensus expectation of analysts.
Net income grew 32% to $2.17 billion from $1.64 billion in 2009’s third quarter, while earnings per share rose 31% to $6.72 from $5.13. On a pro forma basis, which excludes certain items, net income was $2.46 billion, or $7.64 per share, exceeding the analysts’ consensus of $6.67 per share and topping the $1.88 billion, or $5.89 per share, in 2009’s third quarter.
Sites owned by Google generated 67% of total revenue, while partner sites generated 30%. Google got 52% of its revenue from its international businesses. As of Sept., the company had cash, cash equivalents and marketable securities worth $33.4 billion. During the third quarter, Google grew its global staff by 7% to 23,331 full-time employees, up from 21,805 in the second quarter.
People clicked on Google search 16% more than on 2009’s third quarter. Google generates most of its revenue from so-called pay-per-click text ads served along with its search engine results and on partner Web sites. The cost to advertisers of those Google PPC ads rose 3% year-on-year.
Mobile advertising revenue — driven by adoption of Google’s open-source Android smartphone operating system — is at $1 billion a year, extropolating from the most recent quarter’s results. Google’s CEO, Eric Schmidt, expects Android revenue to reach $10 billion a year, driven not just by mobile advertising, but by other services such as selling music and videos. He believes that eventually there will be 1 billion Android phones in use, and that Google can get $10 per user per year from them.
Net, net, not bad for a search and advertising provider, right? (I indeed think these guys should leave this company denomination). Those thinking that mobile (and telecom) is a safe business for telecom operators are basically wrong. Let’s see what the future brings. In the meantime, B-R-A-V-O Google!
Enjoy the reading, CVA