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We're In The Money, Says Google

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Google's profitable and has been so on an operating basis for the past two quarters, the company says. Along with being profitable, the company also has a new chief executive officer, Dr. Eric Schmidt.

Schmidt was named to Google's board of directors as chairman last March. Now the former Novell CEO takes over from Larry Page, one of Google's cofounders. Page has moved into the new position of president of products. Google's other cofounder Sergey Brin, has changed his title from president to president of technology.

The profitability announcement begs the question -- if Google's been profitable for the past two quarters, then why didn't it say this earlier rather than its constant refrain that the company would be profitable later this year?

"We're a privately held company, so we don't have an obligation to disclose this information. We chose the announcement of our new CEO as an opportunity to also talk about our financial performance as an indicator of the strength of our business," said spokesperson Cindy McCaffery.

That doesn't really answer the question. Yes, Google doesn't have to say anything about its business performance, being a private company. Nevertheless, it has made such statements earlier this year and given the indication in them that it wasn't yet profitable. Now, it appears, the company really was.

In another key development, Google previously said its revenue was half from advertising, half from powering search for others. Now the revenue is described as two thirds from advertising, one third from powering search.

Google hits on profit formula
The Guardian, Aug. 8, 2001
http://www.guardian.co.uk/business/story/0,3604,533679,00.html

Not just profitable but "quite" profitable, with $35 million in cash and one analyst somehow coming up with an estimate that Google will earn $50 million in revenue next year.

Eric Schmidt's lucky search
News.com, Aug. 8, 2001
http://news.cnet.com/news/0-1014-201-6807878-0.html

Q&A with Schmidt, which notes the current revenue split at Google.

Google joins elite of profitable net firms
Reuters, Aug. 7, 2001
http://news.zdnet.co.uk/story/0,,t269-s2092668,00.html

Being a private company, we don't really know what's happening with Google's finances. But I agree entirely with what this story points out -- a visit to the Google offices gives no indication of a company that is strapped for cash.

Google Picks a Seasoned Exec
InternetNews.com, Aug. 6, 2001
http://www.internetnews.com/bus-news/article/0,,3_860491,00.html

Overview of Schmidt's appointment.

Google Names Former Novell Chief As CEO in Strategy to Raise Its Profile
Wall St. Journal, Aug. 6, 2001
http://public.wsj.com/sn/y/SB99704575910000000.html

In case you saw this story, here are some notable disagreements. Google's business model is seen as questionable because it doesn't sell banners. That's not questionable at all. The other major search engines are in the trouble they in part exactly because they offered banner ads rather than targeted paid listings. Banners have bottomed out while the paid listing market is exploding. Google is also seen as perhaps in danger for holding to closely to search, versus portals that broadened out from their search roots. In contrast, it is actually the companies that largely abandoned search that are facing difficulties while Google capitalizes on their oversight.

Is Google ogling Yahoo's crown?
News.com, April 10, 2001
http://news.cnet.com/news/0-1005-200-5561996.html

In this article, Google states profitability was expected at the end of 2001. However, given Google's recent announcement of having achieved operating profitability for the past two quarters, it would seem that it could have said it was profitable when this article was written.


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