July 20, 2006

Google Q2-2006 sequential growth slows down to single-digit

Posted in Category: Work — Amr Awadallah @ 12:46 pm | link | | comment (0)
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Google just reported their Q2-2006 earnings, and their sequential growth is just 9% over Q1-2006 (the wallstreet whisper number was 10%). This confirms that the search slowdown is industry wide. Note that almost half of that gain in revenue for Google is not natural growth, its one-time growth coming from more ads placed on top of the natural web results (specifically the state where they have 3 ads, e.g. the flowers query).

So for Q3 over Q2 their sequential growth will be even lower than 9%, except if they increase their ads significantly and go to 4 ads above web results (like what yahoo does), and/or start placing ads at the bottom of the page (not just above and to the right). However, we now have to wait and see whether wallstreet will get tricked into believing this 9% growth is natural and sustained, the stock price tomorrow will tell us that. Wallstreet got tricked before, and then it bit them back for Q4-2005 once the revenue accelerating changes caught up and only the natural growth remained.

Unlike Yahoo, Google does not give forward revenue guidance, but if they did, I bet they would be revising the numbers down a bit just like yahoo did.

Cheers,

— amr

PS: Many of us at Yahoo are sad at how severley wallstreet punished our stock, -20%, but we are hanging in there. Our executive management team choose to focus on the long term, and not try to rush things on the Panama front given how much of our long term value is tied to the new platform, they want the Panama launch to be perfect. I am proud to work at a company with that style of leadership, and I back them up 100%.

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