Google’s Midas Touch

Goolge (GOOG) posted non-GAAP EPS of $3.68 ($3.18 GAAP) and revenues of $3.66 Billion on a GAAP basis, but its ex-TAC revenues were $2.53 Billion (thats the # to look at) versus estimates of $3.30 EPS & $2.495 Billion in revenues; this beats even the Whisper on EPS.  The company’s TAC has been flat at 31% of revenues now for 3 quarters.  Operating margins were 49% versus roughly 48% estimates.  It added almost 1600 workers, even higher than what was believed: On a worldwide basis, Google employed 12,238 full-time employees as of March 31, 2007, up from 10,674 full time employees as of December 31, 2006.

A true skeptic could say that they wanted to see higher revenues, but the initial reaction is up by 2% to $482+ in after-hours.  We would still like to see the stock split, and we aren’t alone there; and here’s what we said in there ahead of time with a full preview from yesterday inside that story.

It is still growing internationally: revenues outside of the US were 47% of total, up from 44% in Q4 2006 and up from 42% of Q1 2006.  The PAID CLICKS related to Ads served on Google sites and AdSense partners grew 52% from Q1 2006 and grew 13% from Q4 2006.

Google also announced that Eric Schmidt has been elected Chairman of the Board of Directors, and John L. Hennessy, President of Stanford University, has been elected Lead Independent Director. Dr. Schmidt has been a Director since March 2001, and Dr. Hennessy has been a Director since April 2004.

As of March 31, 2007, cash and equivalents equivalents was $11.9 billion and it had an effective tax rate of 26%.  Naysayers can say what they want.  We’ll have to get through the conference call and the myriad of analyst calls on it before knowing where this one is opening tomorrow, but this one looks great on first look.

Jon C. Ogg
April 19, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.