Shares at Google dive despite fourfold profit rise |
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Fri, 22 Jul 2005 18:05
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Even as top search engine, Google reported an exemplary fourfold profit rise in the second quarter, its shares plunged with the company expecting sluggish growth in sales along with slim profit margins.
Google’s net income climbed to $342.8 million, i.e. $1.19 per share from $79.1 million recorded in the previous year, along with sales that became twice to $1.38 billion. However, moving at a measly 10% from the first quarter, revenue has been crawling lazily ever since Google went public in August.
Meanwhile, sales topped the $842.5 million estimated figure by analysts, barring the payment made to other Web sites for advertisements and publicity.
Chief financial officer George Reyes informed at a conference call with analysts that profit margins at Google had shriveled to 34.4% from the 35.2% figure recorded in the first quarter, and there were increased chances of margins only thinning further.
Google stock that touched $317.80 during early trading, expecting a rise in profits slipped to $19.29, i.e. more than 6% in extended trading. Nasdaq Stock Market closed at $313.94, tripling ever since Google’s sale of shares in August. Contrarily, Yahoo, the next best internet search engine, posted an unsatisfactory performance with earnings that did not meet experts’ expectations and did not hope any better for the next quarter as well. Yahoo’s shares fell 11% following dismal results, losing 46 cents more at $32.94.
Scott Kessler, a New York analyst at Standard & Poor's said, “Google is growing revenue at a considerably faster rate than Yahoo is, largely because of their greater exposure to the keyword-search segment of on-line advertising.”
Furthermore, the proportion of global Web searches were stretched by Google to 55% in April as against 47% last year whereas Yahoo searches plunged to 22% from 25% as per Internet tracker ComScore Networks.
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