Google Execs Paint Bright Picture, Say Microsoft Is Biggest Rival

Google Inc. provided stock market analysts with more color about its secretive operations Thursday, painting a bright picture that appeared aimed at defusing growth concerns raised by the search engine leader's chief financial officer earlier this week.

The meeting gave Google a chance to address recent complaints that it doesn't share enough information to its shareholders, maintaining a tightlipped approach that has recently contributed to wild price swings in its stock price.

In his opening remarks, Google CEO Eric Schmidt assured the roomful of analysts that he sees "tremendous headroom" to develop an even more effective advertising approach.

Schmidt underscored his optimism at one point by saying Google someday might generate $100 billion in annual revenue as it expands into a variety of new advertising channels, including television, radio and publishing. The 7-year-old company's revenue totaled $6.1 billion last year.

"Our assessment is we are in the strongest position that we have ever been," Schmidt said later in the day.

The upbeat remarks contrasted with Reyes' cautious commentary during a question-and-answer session at a Tuesday investor conference in New York. At that time, Reyes cited the difficulty that Google would have improving its advertising formula and advised the company's growth rate was bound to slow down -- a prospect that set off alarms among investors and caused Google's stock price to drop precipitously.

Google's stock rebounded Thursday, apparently lifted by the confident tone of management's remarks. The company's shares gained $11.65, or 3.2 percent, to close at $376.45 on the Nasdaq Stock Market, then added another $5.67 in extended trading. Despite the rally, Google's stock remained about 4 percent below its value before Reyes raised the specter of slower growth.

Without referring to his earlier comments, Reyes accentuated the positive Thursday. As he showed a chart depicting Google's 92 percent increase in revenue last year, Reyes said, "This is a pretty darn impressive set of numbers. We are very proud of what we have accomplished."

As they tried to address investor worries, Google's executives stuck to the company's prohibition against making financial projections -- an edict mandated by company co-founders Larry Page and Sergey Brin.

Despite those restraints, Google still managed to serve up more insights than a year ago when it held its first major investment meeting as a publicly traded company.

During last year's session, Google exasperated analysts by devoting a substantial amount of time discussing the quantity of free food it feeds its employees. This time around, Google fed the analysts with more numbers, although the company continued to skimp on the specifics.

Reyes told analysts that Google's capital spending this year will be substantially higher than last year's $838 million investment. He indicated most of the money will be spent increasing Google's already formidable computing power so it can deliver more products and servers to Web surfers.

Google also plans to continue a hiring spree that expanded the company's payroll by an average of seven new employees per day last year. Reyes said much of the hiring will be concentrated outside the United States as Google continues to expand internationally.

In another development, Schmidt identified Microsoft Corp. as the rival that most worries Google because of the way the world's largest software maker has aggressively attacked other technology upstarts in the past.

Microsoft currently runs the Internet's third most popular search engine, ranking behind both Google and Yahoo Inc., but it has vowed to close the gap by improving its technology and luring new users by giving away free merchandise and services.

Schmidt also said there's no sign that the prices to advertise on Google's network have peaked -- another factor that bodes well for the company's future profits.


comments powered by Disqus

Subscribe on YouTube