[IP] Google's latest goof
-------- Original Message --------
Subject: Google's latest goof
Date: Tue, 07 Mar 2006 21:45:13 -0500 (EST)
From: EEkid@xxxxxxx
To: dave@xxxxxxxxxx
Google's latest goof
Shares slip after search engine discloses that certain slides presented on
the Web during its analyst meeting shouldn't have been there.
NEW YORK (CNNMoney.com) - Search engine Google disclosed in a filing with
the Securities and Exchange Commission late Tuesday that statements
about sales
projections were inadvertently posted on the company's Investor Relations
Web site during its analyst day presentation on March 2.
The company said in the filing that slides showing that Google expected
revenue to grow from $6 billion in 2005 to $9.5 billion this year and
that profit
margins in its AdSense business would "be squeezed in 2006 and beyond"
were
part of notes prepared during the fourth quarter of 2005 for an internal
strategy presentation and were erroneously included in a slide
accompanying the
analyst day Webcast.
Google cools off: Shares of Google are still up substantially over the
past
year but the stock has taken a hit since reporting lower than expected
earnings in January.
Google added that the sales figures should not be construed as financial
guidance and that comments about profit margins do not "reflect
Google's current
expectations."
What we have here, is a failure to communicate
The company's disclosure snafu is the latest in a series of problems that
the company has had communicating with Wall Street. Shares plunged last
week
after chief financial officer George Reyes said in a presentation at a
Merrill
Lynch Internet conference that growth in the company's core business of
search-based advertising was starting to slow. The company later
clarified that
statement to say that it still saw "significant opportunities" for revenue
growth.
Google also said in Tuesday's filing that comments about the company's
stock-based compensation charges for 2006 should not have been included
in the
presentation. But Google said that the information in that particular
slide,
namely that the company would need to take a charge of $342 million
related to
stock awards granted to employees and directors prior to this year, was
"materially accurate."
The popular search engine company famously has refused to provide any
revenue or earnings guidance to Wall Street since going public in August
2004.
Analysts, however are predicting that Google will generate sales of $6.6
billion
in 2006 and sales of $9.2 billion next year. Those numbers exclude traffic
acquisition costs, or revenue that the company shares with affiliate
partners
such as AOL, the Internet unit of Time Warner (Research) that Google has
purchased a 5 percent stake in for $1 billion. (Time Warner also owns
CNNMoney.com.)
Shares of Google (Research), which fell about 1 percent in regular trading
on the Nasdaq Tuesday, slipped more than 2 percent in after-hours trading.
Room for growing pains?
One analyst called Google's slide goof a "boo-boo" but added that it
was not
something that would have a major impact on the company going forward.
"It's a standard mistake made by a company that's newly public, but
because
it's Google, of course everything is magnified," said John Tinker, an
analyst
with ThinkEquity Partners. "The company is on a learning curve and they
are
beginning to realize they are not operating under the radar anymore."
Still, Google's mishap comes at an inopportune time for the company.
Google's stock has tumbled more than 15 percent since the company
reported fourth
quarter earnings in late January that were below analyst expectations.
Shares
now trade at nearly 25 percent below their all-time high from early
January.
The company sought to reassure investors and analysts during its
presentation last week that it still saw healthy growth opportunities in
search and that
it was also looking to expand into new areas of online advertising as well
as other aspects of the traditional media business.
Nonetheless, investors are worried about increased competition that Google
is facing from the likes of Yahoo! (Research), Microsoft's (Research)
MSN and
the revamped Ask.com, owned by IAC/InterActive (Research). Analysts have
also
expressed concerns about how much Google's capital expenditures for
2006. The
company has said that it plans to invest heavily this year in order to
roll
out new products and services and that has some investors worried about
the
impact this spending will have on profits.
Google has also come under attack for cooperating with the Chinese
government and agreeing to censor certain search results on its Chinese
Web site and
for refusing to hand over information about random searches that the U.S.
government has asked for in order to use to try and revive a child online
pornography law.
With all these risks in mind, some on Wall Street have begun to question
whether or not Google is worth its premium stock price; shares trade at
more
than 40 times 2006 earnings estimates.
_http://money.cnn.com/2006/03/07/technology/google/_
(http://money.cnn.com/2006/03/07/technology/google/)
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