Google Inc. (NASDAQ: GOOG) is out with earnings and the results are not exactly what Goggle fans expected. The internet search giant (and digital amalgamated conglomerate) turned in earnings of $8.08 EPS and ex-TAC revenues were $6.54 billion. Thomson Reuters has consensus estimates of $8.11 EPS and $6.32 billion in ex-TAC revenues. Revenue growth of 27% is hard to knock on the surface. That comes to $8.58 billion in revenues if you include the Traffic Acquisition Costs. TAC came to $2.04 billion, or about 25% of advertising revenues.
Net cash from operations was $3.17 billion on $2.28 billion in free cash flows and Google ended with $36.7 billion in cash. That means that close to 20% of Google’s $186 billion in market cap is cash. What is going to drive some caution is that operating expenses keep rising. They came to $2.84 billion, or 33% of revenues, from $1.84 billion, or 27% of revenues, a year ago. If you tally this up in raw dollars rather than just the six percentage points of revenues, operating expenses are up about 54% by our calculations versus the 27% growth in revenues.
Google-owned sites revenues were up 32% to $5.88 billion and now 69% of total revenues. Google’s network revenues showed that partner sites generated revenues in AdSense of $2.43 billion, or 28% of total revenues. That was up 19%. International revenues are now 53% of revenues at $4.57 billion. Google keeps making money on its currency hedges. Revenues would have been $19 million or $23 million lower depending upon method of calculations. Paid clicks rose 18% from a year ago and 4% sequentially. Cost-Per-Click rose 8% from a year ag, but they fell 1% sequentially. Google’s headcount continues to grow as it employed 26,316 full-time employees at the end of the quarter versus 24,400 at the end of 2010.
Investors aren’t drinking the punch here today. Options traders were not looking for a move of this size. Shares are down over 4% and over $25.00 at $551.28 in the after-hours trading session. The 52-week trading range is $433.63 to $642.96. Stay tuned.
JON C. OGG