Google and the press

Google's Q4 earnings are out and I shamefully lowballed my estimate this time, although investors were apparently highballing their estimates before the release. Revenues were, ahem, only $3.2 billion, up 67% from a year ago, with a profit that nearly tripled to $1.03 billion. The stock price dropped, from a peak of about $505 yesterday afternoon to about $490 as I write this.

The press described it as anything from a "blowout" quarter to "disappointing" because of higher payouts to AdSense customers. Gee, I thought that meant that the ads are more successful so more revenues are going to the sites that host them.

Think back to a little over two years ago, when the press was helping to drive down the IPO price to $85 by universally criticizing the company in the month before the IPO. They warned that Microsoft and Yahoo were hot on Google's heels -- despite the fact that both companies had already been (unsuccessfully) trying to unseat Google for two years. They said Yahoo was better because it had more diversified revenues, and worried that Google was just another overhyped dot-com company (despite the fact that the dot-commers went public with no proftis, while Google was extraordinarily profitable.

Just for a reminder, here are a few of the comments the press made before the IPO:

“an extraordinarily high premium,” “sky-high multiples,” “based more on the hype factor than business fundamentals,” “harkens back to the late 90s boom,” and “excesses of the bubble.”

And those were all from one article (“Before You Buy Into That IPO, Search ‘Lemmings,’” New York Times, Aug. 1, 2004, by Gary Rivlin.)

The New York Times was not alone. Here's more:

“Think before you buy Google” (Seattle Post Intelligencer, 8/3)

“Google This: Investor Beware” (Business Week, 8/9)

“Loving Google But Not Its Public Offering” (Financial Express, 8/8)

“Google IPO: Not Feeling Lucky” (CNN/Money, 8/12.) (This article states: “if you're tempted to buy shares of the company once it finally starts trading, which will probably be next week, here's my advice. Don't.”)

The press still has a love/hate relationship with Google. They're all scared of getting caught up in the hype. Everyone -- especially Donna Bogatin, bless her -- want to be the first to predict Google's demise.

They have a long time to wait. The simple truth is that, unless a company is cooking the books to make things look better until they can no longer fudge it and have to report a bad quarter, a company with this kind of momentum does not lose it overnight.

Remember that: 67% revenue growth. For the same quarter last year it was 70% revenue growth.

Google ain't slowing down yet. Microsoft and Yahoo are. As Donna might say, Google's growth is downright scary.