A Google Slowdown? Hard To Find With These Earnings

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First it was Intel then IBM , and now Google . Pretty soon, the message might get out that tech isn't nearly as bad as people thought. No two ways about it: the Google earnings report is extraordinary.

Google reported $4.84 in earnings per share when the Street consensus was down at $4.52. An unusually, uncharacteristically, the whisper number, courtesy of whispernumber.com was actually 4 cents below consensus. When was the last time you saw that with a company like Google?

That bottom-line beat came from a top line that also exceeded expectations, with Google reporting $3.7 billion, after backing out traffic acquisition costs (TAC), which beat Street consensus by $90 million.

The company also is reporting that 51 percent of its revenue is now coming from overseas customers, a big increase from the 40 percent the company reported last quarter, and good news for investors worried that an economic slowdown in this country would hurt Google's business. The thinking is that the more this company can generate from international customers, the more insulated it becomes from an economic weakness in this country.

Further, the hiring line at Google seems well under control. The company says it added 1,500 new workers from the DoubleClick acquisition, and another 851 employees that the company hired itself. While that number might seem high, it's well below the average number of quarterly hires Google has done for the past several quarters. That's a strong indication that Google is keeping a close handle on expenses, and exactly the kind of thing worried investors want to see.

Also, Google's cash position went from $14.2 billion to $12.1 billion. On the air, I pointed that out as "something to watch," though I should have remembered that the DoubleClick deal actually closed during the first quarter and the cash hit was because of that. Nothing surprising there. I thought the cash changed hands in the fourth quarter. So no biggee there. That was expected.

A word on all the cautionary market research that's been grabbing headlines in recent months, helping depress Google shares to multi-year lows and creating a hovering black cloud above this company and its prospects. Much of this chatter comes from market research firm comScore, which as I've detailed in earlier posts, has had to retract some of its data.

And its finding are routinely questioned by so many analysts on Wall Street; but because it's really the only game in town when it comes to measuring paid clicks and click-throughs, many investors consider its results when figuring out where Google is headed.

I'm not going to slam comScore. There is a slowdown in clicks and paid clicks, growing at 20 percent this past quarter, paced a little slower than some on the Street hoped to see. Not the fall-off-a-cliff drop in business; a slight slowing.

So, I will just offer up the facts: comScore is tracking what it says is a marked slowdown in Google's business. Google not only met expectations, or even slightly beat them, but absolutely crushed expectations. "Data" suggesting a slowdown, versus Google's own earnings report showing something dramatically, completely different. 'Nuff said.

And if the news wasn't already good enough, CEO Eric Schmidt on the company's earnings call, just told analysts and reporters " "It's clear to us that we're well positioned for 2008 and beyond, regardless of the business environment that we find ourselves surrounded by."

That goes nicely with IBM's Sam Palmisano who said yesterday that he and his company "feel good about the rest of the year," and Intel's news Tuesday that gross margins would be better than expected for the full year 2008.

Google shares immediately extended their already stratospheric climb as soon as those words left Schmidt's mouth.

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