Google Earnings Fall Short. News at 11.

So Google reported earnings today and came in well below guidance. I don’t know a lot about the markets or the shady happenings of after hours trading, but as of this posting Google is trading at $68 less (15%) than at market close (according to Yahoo! Finance).
This ain’t pretty, and after the Yahoo! whoopin’ a few weeks ago, the overall picture of search/ad-based businesses like these isn’t so great. Sure, there’s a lot of money to be made, but from where I’m sitting, the search market – however large – is finite. Google spends an enormous amount of money on initiatives that don’t generate money. Yahoo! has been buying up companies like Flickr and that also don’t make money. The vice is going to continue to tighten. Eventually, you gotta pay the bill.
But wait, it gets even more interesting…
Google, Yahoo! and all the Web mini-players have to contend with one more wrinkle: their businesses live and thrive inside the browser’s walls. And there’s only so much you can deliver to keep putting eyeballs on those web ads. Microsoft is watching all this with a smirk. The desktop is about to be lit up through all sorts of remote services like we’ve never seen before. Yahoo! knows it, so they bought Konfabulator (now Yahoo! Widgets). Google knows it, that’s why they’re on their way to building some sort of desktop.
It’s going to be interesting to watch this play out. There’s a lot of good thinking and innovation happening today, but very little of it is tied to real, accountable business (and no, dolling up a startup for a Yahoo! acquisition is not real). Hopefully this signal from Google won’t put a damper on that innovation but rather encourages a tighter connection to real, tangible business goals.

3 Comments Google Earnings Fall Short. News at 11.

  1. Danny

    Deja vu!! it seems we never want to forget that the new “innovation” has to be linked to real achievements and goals. I would like to blame the VC culture for this…


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