What Google Should Have Said

Here's what an actual "clarification with further information" would have looked like:

At a Merrill Lynch investment conference today, our CFO, George Reyes, accidentally described something he shouldn't have, our "RevForce initiative."  We are not going to change our policy about forward-looking guidance, but we are going to clarify George's remarks and add some further information.

As George mentioned, in the last 18 months, we have dedicated a SWAT team of our most-brilliant engineers to cranking up our monetization.  The team's contributions included the additional paid links you see at the top of each page, improved relevancy, and other features, and they have succeeded in spades.  Over the past 18 months, we estimate that this RevForce initiative has added approximately XX percentage points to our annual growth rate.

As George also mentioned, however, the SWAT team has now encountered the Law of Diminishing Returns.  As a result, our growth is now regressing toward our organic growth rate, which we estimate to be approximately XX%.  This growth rate has slowed in the past few quarters and we expect it to continue to slow going forward.

To avoid any further confusion, we will also offer a one-time-only commentary about Wall Street estimates.  At this time, we are comfortable with the current consensus estimates for revenue and EPS for Q1 2006. 

We regret our contribution to yesterday's turmoil, and we will try to be more careful in the future.

Comments

[james doran]

Henry,
I'm The Times' Wall Street Correspondent.
Can we talk? Love the blog
JD

[Wizzbox]

I'm no Wall Street Correspndant or former analyst, but even I was able to find the most important thing from the Google non-guidance/guidance-announcement/slip yesterday. The ONLY thing that matters is how much did this impact past growth rates and to what extent do we need to rethink our assumptions about future growth rates.

This whole thing seems irresponsible on a number of levels.

http://wizzbox.wordpress.com

[Srinivasan]

Google 'should have' said? They 'should have' done many things differently. Guess what, if the market has the guts to dump google stock and tell them that what they have built is an advertising engine and not a space ship to carry the whole world, maybe they will understand. or, maybe they will not.

[Stuart MacDonald]

Henry, you are doing the all-GOOG-all-the-time thing again...

- Stuart

[Tel Aviv]

Well this one and a half product company has still a lot of room to growth , they have a lot of traffic that is not yet monitized well. for example what if google will start charging mertchants additional fees to be in top spot (in additon to the bidding system). Dont foregt local search, international growth is also a key i see what they are doing here in israel and its quite brilliant and this is really a small market.
In regards to click fraud it could be solved by incorporating a bidding system based on % of sales or subscription and merchants could compete on percentage and ROI.

Alon Israeli

[Henry Blodget]

Sorry about the Johnny-One-Note thing. I got involved in the story and couldn't let go...

[/pd]

At the recent sew event- it was mentioned that 5% of online usage contributes for total search market revenue. GYM- have not outlined what they plan to do for the monitization of the remaining 95% space !!

Google has the lead on in this game and if they focus they shoulde be to create additonal value and convert some of those revenue flows that go into the MSM's.

As someone said "this is a one and half product" company- all they need to do is get the remaining half done fast and correctly and then they will be out of the gates for another race !!

[SJGMoney]

sew, GYM, MSM....Please use more acronyms!!!