During its 10 quarters as a publicly listed company, Google has performed ahead of analyst projections in all but one of them. The repetition of this formidable feat has seen Google's fourth quarter revenue grow 67 per cent to $3.21 billion in defiance of the average expectation, which was of a 64 per cent growth to $3.14 billion.
Some analysts have argued that Google's huge growth is a direct result of the company enjoying a lower tax rate in its final quarter than previously expected. Rob Sanderson, an analyst for American Technology Research, has calculated that if the tax rate had been as expected Google would have made $2.99 per share net profit, rather than the $3.29 per share reported. However, the fact remains that this estimate is still seven cents above the original average projection by analysts.
Nevertheless, for some investors Google's growth has not been enough. While Google's shares were valued at over $500 at the close of trading at NASDAQ on January 31st, extended trading saw the share price drop to around $494.
The problem may be that people have become accustomed to Google dominating the market completely, and could have expected an even bigger increase when compared to the share performance of search engine rivals Yahoo! and MSN. While Google has gained market share over these two companies, the gain may not have been as large as some were expecting.
Google's income growth has come from two main sources: its American sources still account for the majority of the total, but income from international sites has increased significantly, from 38 per cent at the same time last year to 44 per cent.
When considering the types of sites that provided income, Google branded sites, such as Google SERPs, Gmail and Froogle, contributed to 62 per cent of Google's total income, with the content network composing the rest.
The commissions paid to sites on Google's content network also rose in 2006. In total, commissions paid amounted to $976 million, representing 81 per cent of the $1.2 billion income that the advertising network gained for Google. On Wednesday, Google co-founder Sergey Brin stated that in the future the advertising websites could be paid even more - particularly if Google's plan to distribute online video adverts materialises.
Google continues to hire staff at an astonishing rate, its work force nearly doubling in size annually. Its competitors are being forced to catch up technologically in the paid search market, with rival Yahoo! recently implementing features such as geographic targeting of PPC ads. Google is further expanding into radio, newspaper and targeted TV ads - all excellent reasons to expect it to continue its amazing growth right through 2007.
