April 21, 2006 | posted by Michael Baxter in Uncategorized |

It was just like old times at Google. Or to be precise it was like any other results announcement at the company.

The performance was startling, no other word will do.
The company which made a $27mn profit in the final quarter of 2003, and made just under $400mn throughout the whole of 2004, made a profit of $592mn in the first quarter of 2006.
Revenue hit $2.25nb, up 79% on a year earlier,
Google doesn’t do things the way investors like. It makes mistakes with tax calculations; it accidentally posts slides at presentations that none is supposed to see,;and it doesn’t do forecasts.
It doesn’t do things the way Congress wants either, censoring its Chinese search engine.
And here a statistic to make enthusiasts of ‘dot com bubble burst 2’ theory go smug. The latest set of profits come in at $1.95 a share, and yet as of last night shares were trading at $448. That’s a big, big ratio of valuation to profit. (Although don’t forget we are comparing the share price with quarterly profits, not annual.)
The key of course lies in what Google will make next year and the year after it’s the forward pe ratio that counts.
With the company trying to make it big in the world of Internet TV, now the talk is that it’s planning to launch a VoIP product for mobile phones in the US. Rumour has it the company is gunning to buy out a major wireless provider.
The profit is growing at an extraordinary rate. Ambitions at the company seem not at all diminished.
The snag is this; the share price can only be justified if this stellar growth performance continues.
Then again Internet advertising is big but its still small beer compared to TV and press advertising. There’s a lot of scope for growth yet.