I was just reading the WSJ <sorry no link – reading the hard copy>, and there are a couple of articles about Google. There is one that talks about valuation, but the one that caught my attention was the one that talked about revenue and expense recognition.
While I work in finance, following publicly traded companies or those that are about to IPO is not my area of expertise. However, I have been disappointed that supposed “professionals” have been missing the fact that Google reported “net revenue” on their S-1 as opposed to most internet companies that report Gross revenues. At least three people brought this up in Webmasterworld within a few hours of the filing. However, the financial media has kept comparing revenue figures between Yahoo and Google as if both meant the same thing. It is the perfect example of comparing apples to oranges.
This article in the Wall Street Journal brings this up and should finally put that issue to rest. In addition, I am also glad that the Journal brought up the “stock based compensation”, which was such a big expense item in the income statement.
In conclusion, the way that Google does its accounting is much more conservative than Yahoo so take that into consideration when assessing the company.
P.S: My internet connection at work is the worst so I could not hunt down a link for you guys. The darn wsj.com site keeps timing out