Google Boasts Another Banner Quarter
MADELEINE BRAND, host:
This is DAY TO DAY from NPR News.
On Wall Street today the Dow is in record territory, flirting with the 13,000 mark. Today's rally is spurred in part by strong earnings reported by businesses throughout the week. Take Google, profits there up 69 percent.
John Dimsdale is here from Marketplace.
And John, it seems like this company, the company that promised to do no evil, can also lose no money. What's going on?
JOHN DIMSDALE: It beat all the analysts' predictions. Google's profits were a billion dollars in the first quarter. That's seven times Yahoo's growth, three times eBay's. Most of that money came from Google's core business - search ads. But the company's now expanding into selling radio and television ads, as well.
Just an example of how good this is, there had been a worry on Wall Street that Google was spending too much money too fast. After all, this is a company that hired 1,600 new employees just this year. But this latest earnings report shows that Google's expenses in ratio to its revenue actually dropped, which is another case where Google's performance exceeded expectations.
BRAND: And lucky stock holders. The stock was $470 a share before these earnings. It's jumping up again, it must be today. Today's bull market.
BRAND: yeah, anything going to stop this company?
DIMSDALE: There's not much to worry about in Google's future. One thing is its purchase of YouTube. That's the video sharing site that's become so popular. But some content providers, like TV networks - Viacom, in particular - are suing YouTube for not keeping copyrighted material off the site. And analysts wonder why would Google take on these legal headaches. There's a potential cost there and something that could ultimately hurt YouTube.
Another concern is an announcement last week that Google is buying an online ad company, DoubleClick. There's some big advertisers - Microsoft and AT&T, for example - asking antitrust officials to look into whether this could be too much concentration of advertising clout.
And just today privacy advocates are raising flags about DoubleClick and Google together. The two companies could learn too much about Web surfers. Privacy watchdogs are asking the government for safeguards to make sure that searching and ad companies don't collect too much information about users.
And there's always the potential that eventually, you know, there's going to be a saturation point for search ads. You can't keep growing this fast. Some are predicting that it will sooner rather than later, but Google is diversifying into other ads, as I said, and claims to be ready.
BRAND: OK, so Google is propping up the stock market there. What else is making the stock market hum today?
DIMSDALE: You mentioned it's been a week of very good earnings reports. Today, Caterpillar and Honey Well posted strong first quarter reports. The stock market seems to be shaking off worries about the bursting of the housing bubble. Seems a tentative sense that the economy has dodged a bullet that could have ended up in a recession.
BRAND: Thank you, John. That's John Dimsdale of public radio's daily business show Marketplace. And it's produced by American Public Media.
(Soundbite of music)
BRAND: Stay with us. DAY TO DAY returns in a moment.