2012 Earnings: First Quarter
Google is back on its game. In April 2012, the search giant announced an effective two-for-one stock split, its first ever, as itrecorded higher revenues and earnings for the first quarter of 2012.
Net income rose 60 percent to $2.89 billion, or $8.88 a share, compared with $1.8 billion, or $5.59 a share, in the same quarter a year earlier. The company said revenue rose 24 percent to $10.65 billion.
The results beat analysts’ expectations. According to First Call, analysts had been expecting revenue of $8.15 billion. Analysts also focus on the amount advertisers pay for clicks on Google ads, a metric called cost-per-click, which dropped 12 percent from the quarter a year ago and 6 percent from the fourth quarter. But the number of paid clicks was up 39 percent from the comparable quarter a year ago and up 7 percent from the fourth quarter of 2011.
Google disappointed in its previous earnings report, for the fourth quarter of 2011. Its biggest stumble during the 2011 fourth quarter was not in finances but in public relations. The company rolled out a new privacy policy that let it combine results from across the Google empire to help it target ads better. In essence, the company said it would construct a profile of users as they watched YouTube, wrote e-mail and searched for diversion or information. Google called it “a simpler, more intuitive Google experience.”
Users called it invasive and complained noisily. The company’s arch-rival Microsoft ran mocking ads. Politicians took notice.
Google’s motto, famously, is “Don’t Be Evil.” An ambitious goal, or at least a cheeky assertion — and one that is called into question by commentators each time there is another privacy flap. But Larry Page, who marked his first year as chief executive in April 2012, seemed to up the stakes when he wrote in a letter to the Google community that “we have always wanted Google to be a company that is deserving of great love.”
Seeing the Promise in Hardware
Google seems to be realizing that it needs real-world products to connect with its many virtual-world services.
In June 2012, at Google I/O, the company’s annual conference for developers, the company unveiled a new 7-inch tablet computer called Nexus 7, and a sphere-shaped device for streaming music and video called Nexus Q.
Both debuts paled in comparison to the company’s amped-up demonstration of Project Glass, a device that puts a camera and a tiny video screen into a kind of eyeglass frame.
Google co-founder Sergey Brin said the company would make a $1,500 prototype of the glasses — which it calls the Google Glass Explorer Edition — available to developers from the United States who attended the conference. He said the glasses were slated to ship early in 2013.
Google’s focus on hardware is a strategic shift for the company, which makes the vast majority of its revenue from advertising. Google is likely to sell the Nexus 7 and Nexus Q at cost, or even at a loss, but hopes to make up for those losses — and then some — with additional revenue from purchases made on Google Play, its app and content store; additional traffic to its YouTube video site; and the advertising it reaps from all of its Internet products.
The Nexus 7 tablet features a lightweight design and high-definition display. It is priced its at $199, which puts it in direct competition with Amazon’s Kindle Fire. It runs on the new version of Google’sAndroid mobile operating system, called Jelly Bean.
The Nexus Q streaming music and video device is priced at $299. It allows any user with an Android phone or tablet to wirelessly send content to speakers or a television, all over the air. Ultimately, Google plans to make the Q a portal that will link to other Internet-connected devices in the home, such as smart refrigerators, picture frames and light bulbs.
At the conference, Google also announced that it would offer computing as a service accessible over the Internet, much like Amazon Web Services, Microsoft Azure, Rackspace and others. Google said its prices would be about 50 percent below those of current market rates.
Google’s move was not surprising, given the success Amazon and others have had in persuading corporations to ditch much of their on-site data storage and computing resources in favor of a publicly shared “cloud” of computing.
If anything, Google was somewhat late to the game. Google pioneered many of the techniques in cloud computing, but for years kept its technology proprietary.
Background
Google is the world’s most popular Internet search engine. It is a position that has earned Google huge profits and given it outsize influence over the online world.
As a company, Google aims high. But its ambition far exceeds the confines of Internet search and advertising. The company sees its mission as the organization of the world’s information, making it universally accessible and useful.
It has built a powerful network of data centers around the globe in hopes of, among other things, connecting users instantly with high-resolution satellite pictures of every corner of the earth and sky; making the entire text of books, in and out of print, available online; and becoming the leading distributor of online video through YouTube, which it acquired in 2006.
At the same time, Google has taken its advertising system offline, as it tries to capture portions of large ad markets in television, radio and newspapers. It is investing heavily in mobile phone technology to replicate its online success in the wireless world.
And it has built an array of online software programs, including e-mail, word processing and spreadsheets, that it hopes will become the building blocks of a new paradigm of web-based “cloud’' computing — one that, unlike the Microsoft-dominated PC world, will have Google at its center.
Google’s unbounded ambition, as well as what many critics say is a cavalier approach to copyrights, has put the it at odds with a growing list of companies in industries ranging from Hollywood to book publishing and from telecommunications to e-commerce. And the company’s appetite for collecting vast amounts of data about its users and their online habits has prompted increasing fears that Google could become a threat to consumer privacy.
The company continues to dominate in its core business, search advertising. But Google faces fierce competition from social media sites like Facebook and Twitter. What’s troubling for Google about Facebook’s growth is that the information exchanged over the social network is walled off from search engines — and increasingly lucrative territory for ads.
In 2011, looking to extend its reach as a hub for entertainment and social networking, Google introduced a set of music features that include a download store to compete with iTunes.
The service, Google Music, will sell individual tracks as well as full albums, letting customers store the files in “cloud” accounts. Through an integration with Google’s nascent social network, Google+, the company will also let customers share music by offering friends one free chance to listen to any purchased track.
By offering a music store that has sharing capabilities, Google is directly competing with Apple, Amazon and Facebook.
Changes at the Top
In April 2011, Larry Page, a co-founder of Google, took over as chief executive, succeeding Eric E. Schmidt, the company’s longtime chief. Mr. Schmidt remains executive chairman and serves as adviser to Mr. Page and Sergey Brin, the other Google co-founder and its president of technology. Mr. Page, who had served as the company’s president of products, led the company in its early days but relinquished that role in 2001, when it was still private.
As chief executive, Mr. Page has faced challenges on several fronts.
Though Google remains immensely powerful and successful, it is an aging giant that moves a lot slower than it did when it was a hot start-up. It is losing employees to the new, hotter start-ups, and is being pushed around by government regulators and competitors like Facebook, Apple and Amazon, which are all vying for people’s online time. While Google has had success in new areas like mobile and display advertising, it has struggled to branch out into other businesses like television.
Borrowing from the playbooks of executives like Steven P. Jobs and Mayor Michael R. Bloomberg, he has put his personal imprint on the corporate culture, from discouraging excessive use of e-mail to embracing quick, unilateral decision-making — by him, if need be.
Under Scrutiny of Federal Regulators
Google might be one of the coolest and smartest companies of this or any era, but it also upsets a lot of people — competitors who argue it wields its tremendous weight unfairly, officials who says it ignores local laws, privacy advocates who think it takes too much from its users.
During 2012, Google has become the subject of almost constant scrutiny from regulators, competitors and privacy advocates. In mid-April, the Federal Communications Commission hit Google with a $25,000 fine for impeding an investigation into its data collection practices.
At the end of April, the Federal Trade Commission escalated its antitrust investigation of Google by hiring a prominent litigator, sending a strong signal that the agency is prepared to take the Internet giant to court.
In May, the European Commission warned Google that it must move quickly to change four business practices or face formal charges for violating European antitrust law. The commission, after a two-year inquiry, had found that Google might have abused its dominance in Internet search and advertising, giving its own products an advantage over those of others while maintaining that it offers a neutral, best-for-the-customer result.
In the U.S., the F.T.C. is examining Google’s immensely powerful and lucrative search technology, which directs users to hundreds of millions of online and offline destinations every day. At issue is whether Google abuses its power in the market for Internet search. Google controls about 66 percent of the United States search market. Microsoft’s Bing accounts for about 15 percent of Internet searches, with Yahoo gathering 14 percent.
Agency officials cautioned that no decision had been made about whether to bring a formal case against Google. But the hiring of Beth A. Wilkinson, a former Justice Department prosecutor who played a lead role in the conviction of the Oklahoma City bomber Timothy McVeigh, immediately catapulted the investigation to another level. The F.T.C. has hired outside litigators only twice in the last decade.
The case has the potential to be the biggest showdown between regulators and Silicon Valley since the government took on Microsoft 14 years ago.
A spokeswoman for Google declined to comment.
In the U.S., the F.T.C. is examining Google’s immensely powerful and lucrative search technology, which directs users to hundreds of millions of online and offline destinations every day. At issue is whether Google abuses its power in the market for Internet search. Google controls about 66 percent of the United States search market. Microsoft’s Bing accounts for about 15 percent of Internet searches, with Yahoo gathering 14 percent.
Censured for Obstructing Inquiry Into Street View
In 2012, Google revealed that the cars it was using to map streets were also sweeping up sensitive personal information from wireless home networks. In April 2012, the Federal Communications Commission charged that Google had “deliberately impeded and delayed” an investigation into the data collection.
The F.C.C. censured Google for obstructing an inquiry into the Street View project, which had collected Internet communications from potentially millions of unknowing households as specially equipped cars drove slowly by.
But the investigation, described in an interim report, was left unresolved because a critical participant, the Google engineer in charge of the project, cited his Fifth Amendment right and declined to talk.
Google maintains that the data gathering was unauthorized, according to a person with knowledge of the matter, but the engineer is maintaining that other people at the company knew about it. Google was fined $25,000 for obstruction, a penalty it can challenge.
The secret Street View data collection led to inquiries in at least a dozen countries, including four in the United States alone. But Google has yet to give a complete explanation of why the data was collected and who at the company knew about it. No regulator in the United States has ever seen the information that Google’s cars gathered from American citizens.
Google’s Stock Split
Shareholders had long pushed for a stock split to make Google’s shares a bit more affordable, given that they have been hovering around a whopping $650 each.
The stock split would allow Google to issue a special new class of shares to current shareholders. The catch: the new class of shares has no voting rights.
The entire stock split is expected to solidify the founders’ control of the company by diminishing the future voting power of the shareholders.
The decision could be made without a real vote, because Larry Page, Google’s co-founder and chief executive, along with the company’s other co-founder, Sergey Brin, and the chairman, Eric E. Schmidt, collectively already control 66 percent of the vote through special Class B shares. But Google said it will go through the motions of a vote at its annual meeting.
A Ruling for Apple May Affect Google
Android is Google’s free, open-source cellphone operating system. While Android was initially overshadowed by the popular iPhonefrom Apple, its user numbers are soaring.
On Dec. 19, 2011, the United States International Trade Commission, a federal agency, ruled that a set of important features commonly found in smartphones are protected by an Apple patent, a decision that could force changes in how Google’s Android phones function.
HTC, the defendant in the case and a Taiwan-based mobile phone maker using the Android system, said in a statement after the ruling that it would adapt its features to comply with the court’s decision.
At the heart of the dispute were the kind of small but convenient features that would cause many people to complain if they were not in their smartphones. For example, the case involves the technology that lets you tap your finger once on the touch screen to call a phone number that is written inside an e-mail or text message. It also involves the technology that allows you to schedule a calendar appointment, again with a single tap of the finger, for a date mentioned in an e-mail.
The decision could potentially affect far more phones than those made by HTC because the underlying target of the suit is Google, creator of the Android system that now powers more than half of all smartphones sold worldwide.
The ruling was one of the most significant so far in a growing array of closely watched patent battles being waged around the globe by nearly all of the major players in the mobile industry. These fights reflect the heated competition among the companies, especially as Android phones gain market share.
Gaining Ground in the Mobile Market
Google’s leadership role was put into question by the emergence of powerful mobile phones. As people increasingly relied on phones instead of PCs to access the Web, their surfing habits were bound to change. What’s more, online advertising could lose its role as the Web’s primary economic engine.
Google’s acquisition of the software developer Android in 2005 gave the company stronger access to the mobile phone market. And the company’s $12.5 billion acquisition of Motorola Mobility Holdings, which manufactures phones that run on Google’s Android software, gives the company an even greater foothold, as global smartphone adoption accelerates.
The Motorola deal amounted to a huge bet that its future — and the future of big Internet companies — lies in mobile computing, and an opportunity to aggressively to take on its archrival Apple in the mobile market.
The deal, which requires regulatory approval, would also give Google a valuable war chest of more than 17,000 patents that would help it defend Android from a barrage of patent lawsuits.
Google has already shaken up the mobile industry by pushing cellphone carriers to open up their networks, and by licensing its Android system at no charge, increasing competition. With the Motorola deal, analysts said, Google may be able to accelerate innovation in smartphones and tablets.
Phones running the Android system have become increasingly popular, accounting for 43.4 percent of smartphones sold in the second quarter of 2011, according to Gartner research. But many customers have complained that the phones — made by 39 separate companies — can be confusing to use. Apple, by contrast, controls its entire product — device and software. With the Motorola acquisition, Google, too, could exert greater control over its products.
Censorship in China
As a global force online, Google has been increasingly drawn into global disputes, particularly in China.
In 2006, the company reached an agreement with the Chinese government that gave it access to the enormous Chinese market if the company purged its Chinese search results of banned topics.
But in January 2010, Google announced that it would stop cooperating with China’s Internet censorship and consider shutting down its operations in the country altogether. It cited China-based cyber attacks on its databases and the e-mail accounts of some users, and China’s attempts to “limit free speech on the Web,” as the reasons for its decision.
Google’s accusations became a significant source of tension between the United States and China, leading Secretary of State Hillary Clinton to urge China to conduct a “transparent” inquiry into the attack. In March 2010, after difficult discussions with the Chinese government, Google said it would move its mainland Chinese-language Web site and begin rerouting search queries to its Hong Kong-based site.
The stunning move represented a risky ploy in which Google would have turned its back on the world’s largest Internet market, with nearly 400 million Web users. But in June 2010, the Beijing government renewed Google’s license to operate a Web site in mainland China.
The license renewal was a sign that Google, while uncomfortable with censoring its search results on Beijing’s behalf, was determined to keep a foothold in China.
Top-Secret Idea Lab
The future is being imagined at the company’s top-secret lab, called Google X, in an undisclosed Bay Area location.
At the clandestine lab, Google is tackling a list of 100 shoot-for-the-stars ideas. Among the dreams being pursued: a refrigerator that could be connected to the Internet, so it could order groceries when they ran low; a dinner plate that could post what you’re eating to a social network; a robot that could go to the office while you stay home in your pajamas; or an elevator to outer space.
Google is so secretive about the lab that many employees do not even know it exists.
Google may turn one of the ideas — the driverless cars that it unleashed on California’s roads into a new business. Unimpressed by the innovative spirit of Detroit automakers, Google now is considering manufacturing them in the United States, said a person briefed on the effort.
Even as Google has grown into a major corporation and tech start-ups are biting at its heels, the lab reflects the company’s ambition to be a place where ground-breaking research and development are happening, in the tradition of Xerox PARC, which developed the modern personal computer in the 1970s.
Tidak ada komentar:
Posting Komentar