Google is the world’s largest search engine and online advertising network. Founded in 1998 by Stanford Ph.D. students Larry Page and Sergey Brin, Google today is a top web property in all major global markets. It is the largest American company (by market capitalization over $217 billion) that is not part of the Dow Jones Industrial Average.
Google’s utility and ease of use have made it one of the world’s best-known brands. According to Hitwise, Google accounted for 64.49% of all U.S. Searches in the four weeks ending October 27, 2007. Google’s mission statement is, “to organize the world’s information and make it universally accessible and useful.”
I have written at length about Google. Here are some of my previous posts on the space.
1. Google’s Enterprise 3.0 Strategy
2. Google Great at Monetizing Crap
3. Is Google Monetizing YouTube?
4. Google’s AdSense Revenues Vulnerable
Google operates in some of the fastest growing areas such as web-based email, online mapping, office productivity, and video sharing among others.
Google derives 99% of its revenue from advertising. Businesses use its AdWords program to promote products and services with targeted advertising. Google AdWords enables advertisers to place targeted keyword based text and display ads against search results. It charges advertisers on the basis of cost-per-click, and has won the hearts of advertisers all over the world who use AdWords as an efficient alternative to direct response advertising.
In addition, third-party Websites that are part of the Google Network use the Company’s AdSense program to deliver relevant advertisements. AdSense includes AdSense for Search and AdSense for Content. AdSense for Search is for distributing relevant ads from the advertisers for display with search results on its Google Network members’ sites. AdSense for Content allows a variety of ad types to be shown, including text ads, image ads, video ads, link units, themed units and gadget ads. Google also now sells advertisement in the radio and print media.
Google had an IPO in August 2004 to raise $1.67 billion, making it worth $23 billion. Google’s post-IPO stock performance has been ungodly, with shares hitting $700 for the first time on October 31, 2007.
Google reported revenues of $4.23 billion for the quarter ended September 30, 2007, representing a 57% increase over third quarter 2006 revenues of $2.69 billion and a 9% increase over second quarter 2007 revenues of $3.87 billion. Operating income in the third quarter of 2007 was $1.52 billion, or 36% of revenues. Net income in the third quarter of 2007 was $1.24 billion, compared to $1.12 billion in the second quarter of 2007.
EPS in the third quarter of 2007 was $3.91, compared to $3.56 in the second quarter of 2007. Net cash provided by operating activities for the third quarter of 2007 totaled $1.63 billion as compared to $1.23 billion for the second quarter of 2007. In the third quarter of 2007, free cash flow was $1.08 billion.
We will take a look at Google’s vertical strategy in the following posts.