Google beats analysts’ forecasts so regularly that you’d think they’d have learned their lesson by now (pick a number and then add half as much again, we’d suggest), but the US behemoth well and truly exceeded expectations last quarter. Revenue was up a hefty 57% to $4.23bn, nudging profits above the $1bn mark.
A 25% profit margin would be impressive in any industry, but for an internet business it’s nigh-on spectacular – especially given that Google has been investing heavily in new staff and product development. By way of comparison, Amazon (often held up as the other great online success story) made a margin of less than 3% in the second quarter of this year.
Google managed to hit the record numbers by taking even more market share from competitors Microsoft and Yahoo, and by improving the efficiency of its online advertising – according to some estimates it makes twice as much money per search as its rivals. And with more and more advertisers going online, Google is likely to be raking it in for a while yet. As founder Sergey Brin says: even if the company is a one-trick pony, it’s not a bad trick to have.
Meanwhile, it continues to push out new products and services like there’s no tomorrow, with online applications joining its mail, map, feed reader, web design and all sorts of other clever offerings that we can’t remember. Recently it bought Jaiku, a Swedish social networking technology, possibly ahead of a move into mobile phones (which Google notably failed to deny yesterday).
And not surprisingly, investors are lapping it up. The company’s share price has risen by more than half this year – with a market value of nearly $200bn, it is now the world’s second biggest technology company after Microsoft.
That’s also about the same as the GDP of Portugal – and Google managed it with just 16,000 employees, as opposed to the 10.6m inhabitants of that fair country…