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Google Revenue to skyrocket to $750million this year.
Brett_Tabke




msg:1235862
 6:04 am on Apr 13, 2003 (gmt 0)

A good article [nytimes.com] from the NY times just came out.

...said it consists of more than 54,000 servers designed by Google engineers from basic components. It contains about 100,000 processors and 261,000 disks,

Recently, Mr. Page, a 30-year-old software designer, sought to declare the company's newest office building off-limits to telephones, under the belief that it would improve programmer productivity. He almost succeeded. He relented just a week before the building was to open, when someone pointed out that the law required a phone in the elevator. The building now has a phone system.

...executives have privately told the board that revenue will soar from less than $300 million in 2002 to $750 million or more this year, with gross profit margins of 30 percent...

So that explains why the new office building has been nicknamed, the MoneyPlex.

 

Tor




msg:1235863
 6:49 am on Apr 13, 2003 (gmt 0)

And they still have plenty of untapped revenue streams [webmasterworld.com]. How wil this end? :) :)

jaski




msg:1235864
 6:53 am on Apr 13, 2003 (gmt 0)

350 to 750 is huge .. and this acceleration it seems will go unchecked for foreseeable future.

54000 servers, 100000 processors .. numbers are just unimaginable .. I doubt if any other application will be more than two orders of magnitudes below this.

I liked this part best in the article :)
Schmidt recently had to scramble to convince them (Sergey and Larry) that there was no immediate reason for Google to enter the space-tethering business.

Visit Thailand




msg:1235865
 7:01 am on Apr 13, 2003 (gmt 0)

I must admit to knowing nothing about Googles revenue but I doubt these figures.

A) The war - and who knows who the US may target next or what will happen in Iraq.

B) SARS - Asia is in some serious trouble as this continues, and until it is fully understood etc. then a lot of people will hold all advertising budgets.

As I say I know very little about Google's revenue etc but I doubt that company in the economy we have would double.

vitaplease




msg:1235866
 7:03 am on Apr 13, 2003 (gmt 0)

Google is quietly betting on techniques from the world of artificial intelligence. The company is trying to improve its search quality beyond its original ranking formula by developing software that can infer what a questioner wants by mining a database of millions of queries.

Nice lengthy interesting article.

"They're the traffic cop at the main intersection of the information society," said Jonathan Zittrain, co-director of the Berkman Center for Internet and Society at Harvard Law School. "They have an awesome responsibility."

nicely worded reality of now.

Chris_R




msg:1235867
 7:04 am on Apr 13, 2003 (gmt 0)

They weren't marketing it as much before as they did now. It is not unheard of for companies to double in bad economies.

Visit Thailand




msg:1235868
 7:07 am on Apr 13, 2003 (gmt 0)

That is true Chris_R - but when you consider that Googles money seems to come from advertising etc. and the world largest industry - tourism, is being so badly affected I doubt that any such company can double profits or revenue.

Singapore has even said it cannot say (impossible was the word used) to determine its growth for the following year because of this.

Cathay Pacific a major airline has cut over 40% of flights not only within Asia but around the world and they are not alone.

iJeep




msg:1235869
 7:11 am on Apr 13, 2003 (gmt 0)

As I say I know very little about Google's revenue etc but I doubt that company in the economy we have would double.

My companies revenue has tripled compared to last year. We should be hitting the revenue level that we did all of last year some time this month.

I could see these figures being possible because if a companies sales are down they might try running some AdWord campaigns to make up for the slight dip.

I suppose I am in the same boat as you since I don't know much about Google as a business, but if they say it then there must be somebody that feels strongly about the validity of those numbers.

Visit Thailand




msg:1235870
 7:14 am on Apr 13, 2003 (gmt 0)

I_Jeep, can I ask what your last two weeks worth of business was compared to last years.

We are also up on last year but if you look at these last two weeks and use them to estimate future revenue it has to be said we are then down on last year.

vitaplease




msg:1235871
 7:25 am on Apr 13, 2003 (gmt 0)

I think Google ads has not even touched its money making potential.

There are many business search query areas without any ads whatsoever.

I have yet to meet an entrepreneur to whom I explained the workings of Google ads that did not try it out with satisfaction. But I refrain from telling others for fear of overall ad-price increases. ;)

Visit Thailand




msg:1235872
 7:27 am on Apr 13, 2003 (gmt 0)

vitaplease you have a point there I had not considered. Google is also able to go local an enormous advantage.

Actually I must thank you for that tip.

Brett_Tabke




msg:1235873
 7:29 am on Apr 13, 2003 (gmt 0)

Exactly Vita - the content ad network is just kicking in. They are going to continue to take market share. The big misconception about Googles compeition is that it is just other search engines. Googles current major competitor is DoubleClick and the other ad networks.

Visit Thailand




msg:1235874
 7:33 am on Apr 13, 2003 (gmt 0)

Can I ask when is Googles financial year?

I only ask as if it is April to April then the statement could be true.

But I do fear that the wars and SARS will seriosly affect Google.

A friend of mine wanted to go from HK to UK for business but everyone in the UK refused to meet him, this must affect the global economy.

Plus when you consider the airlines are laying off more people than ever before it is also going to affect the global economy and hence ads on Google.

Brett_Tabke




msg:1235875
 7:41 am on Apr 13, 2003 (gmt 0)

>wars and SARS will seriosly affect Google.

Yes, their traffic skyrocketed [webmasterworld.com], and consequently so did revenue.

dkoller




msg:1235876
 9:49 am on Apr 13, 2003 (gmt 0)

I only ask as if it is April to April then the statement could be true.

Sure you can't believe _everything_ you read, but this is the NYTimes we are talking about. Plus, having personally spent $100K on adwords and realizing how few terms I use in the grand scheme, I actually would have guessed gains to be even larger than reported. Adwords is HUGE. Do the math on revenue yourself from 200,000,000 searches...

I'll throw some candy numbers at you real quick:
Say 50% of searches have an adword
and 25% of these searches get an ad click
and avg. cpc of these ads is 0.10 per click

Guess what... that would be $2.5 million revenue in 1 DAY! & Over 900 million in a year. Sure they have to pay partners but a huge chunk is left...
---

More and more people find adwords every day. The bids get cranked up as a result.

Google signs new partners daily.

The economy as a whole is doing just fine.

The number of Internet users & their usage time continues to rise yearly.

Also note that Adwords select was not available from the start of 2002.

It's not a lie. It adds up. Believe it.

But I do fear that the wars and SARS will seriosly affect Google.

The war is essentially over (much work to do -- but I fail to see how that will affect google), and SARS is being dealt with best we can. SARS substantially affecting google [negatively] should be the least of your worries... because at that point there would be much more to worry about besides the health of google.

RonPK




msg:1235877
 11:37 am on Apr 13, 2003 (gmt 0)

Say 50% of searches have an adword
and 25% of these searches get an ad click

Is there any empirical evindence for this? Both figures seem quite high to me. My personal impression is that a very large majority of people is looking for non-commercial information.

rencke




msg:1235878
 2:10 pm on Apr 13, 2003 (gmt 0)

People do click on these ads, believe me. I am doing millions of dollars worth of business based on Adwords with a cost factor around 3,3%. Which other advertising medium can show ROI on that level? But this is what I found really interesting in the article:

The immense size of the system helps explain why taking on Google will not be easy. "Managing search at our scale is a very serious barrier to entry," Mr. Schmidt said.

Indeed! Who could finance something on this scale and still be resonably sure of retrieving their investment within a reasonable time frame? It seems that Google may have reached critical mass and become able to live on for years without fear of really serious competition.

SlyOldDog




msg:1235879
 2:58 pm on Apr 13, 2003 (gmt 0)

How much would 50 thousand servers cost? 50 million dollars? That´s peanuts when you think overture just paid 150 million dollars for AV.

The barriers to entry are high, but they are not insurmountable.

On another note to Visit Thailand - we are in the travel industry and we´ve just tripled our spend with Google. We´ve hardly noticed any drop in tourists at all.

Chicago




msg:1235880
 3:15 pm on Apr 13, 2003 (gmt 0)

Friends, one should NOT doubt Google's ability to generate this revenue. As Brett and Vita suggest, they are just getting started. In fact, about 2 months ago, with a single press release, Google went from the largest search engine to the the "largest ad network" in the world. Google's strategey was to build critical mass ( and boy did they ever), and then turn towards revenues. This turn is new- ADwords is not that old, and the new content ad services --guess what? It is the tip of the iceberg. In the future, if you buy a keyword, your buy will be propagated accross more properties, in more places, than one can imagine. The revenues will poor in. AND IF YOU DON'T BELIEVE IN THESE NUMBERS TAKE A LOOK AT THIS FROM OUR FRIENDS AT OVERTURE:

The company last provided projections on February 6, 2003. Given its recent acquisitions, the company is now providing new estimates. Overture's first quarter 2003 projections remain unchanged. The following are Overture's estimates for the full year 2003, assuming completion of the AltaVista and FAST transactions, as planned:

2003

Consolidated revenue Over $1 billion
International revenue $120-$135 million
Web search/paid inclusion revenue $25-$30 million
Traffic acquisition costs as a percentage of revenue (TAC) 62%-64%
Income before tax (IBT) $80-$100 million
EPS $0.60-$0.70
EBITDA $120-$130 million

rogerd




msg:1235881
 6:31 pm on Apr 13, 2003 (gmt 0)

Visit_Thailand, now that the war is this far along, I don't expect that the impact on ads will be significant. And SARS is barely on the radar screen except for those travelling to Asia. (The big SARS news story in the US last week was the launch of Hong Kong's magazine advertisements that proclaimed, "Hong Kong Takes Your Breath Away!". Great moments in marketing.) I do believe it's true that these issues will affect tourism and business travel in the coming months, but there are certainly many other sources of ads. Indeed, we may see retargeting ads pushing presumably safe tourism like cruises.

Overall, I think Google's accomplishment is fantastic for a privately held firm. That they have been able to delay an IPO this long will certainly maximize the return when they do go public. Hope GoogleGuy snagged a few options... :)

Clovis




msg:1235882
 6:48 pm on Apr 13, 2003 (gmt 0)

while the numbers are quite amazing, i agree with the majority that they are very attainable. i dont think anyone has mentioned specifically the recent partnership of the google blogspace [google.blogspace.com...] with the acquisition of pyra labs.

while still relatively new and much theorizing has taken place, search engine watch [searchenginewatch.com...] had some good points about the reasoning behind it.

if and when google chooses to use this as a source to display ads, that is a largely untouched source of additional advertising space (over a million users) not to mention the additional revenue from the bloggers who are paying fees, small as it may be.

whith some of the leading minds in their particular industry, i find it hard to believe that google would make a number such as this public without first doing serious crunching to make sure it was achievable... it would be a little embarrassing to miss the projected growth numbers by several million.

hooloovoo22




msg:1235883
 6:56 pm on Apr 13, 2003 (gmt 0)

you know what's kind of funny. the better google gets at producing the perfect result set, the less likely it will be that adwords will be used. i know it'll never get to that point, but in a perfect world, better serps = less adwords clicking by the user

dkoller




msg:1235884
 7:10 pm on Apr 13, 2003 (gmt 0)

Is there any empirical evindence for this?

No, I was just trying to show that revenues easily run into 100's of millions of dollars.

I can tell you I do have one campaign that gets 32% CTR, and several at 5-10%. With up to 10 adwords on a page, I actually think 25% may be too conservative an estimate (especially when sponsored links show up). Personally I also think average CPC per adword is much higher than the 0.10 I used. As for the 50%, I could be way off. Fill in your own numbers.

Regardless you get 100's of millions with any sort of reasonable estimates. With adwords first hitting its stride later in 2002, a doubling+ makes sense for 2003.

It was all hypothetical though, yes.

[edited by: dkoller at 7:15 pm (utc) on April 13, 2003]

Chicago




msg:1235885
 7:14 pm on Apr 13, 2003 (gmt 0)

hooloovoo22-
unless, you continue to buy up properties (or at minimum partner) to display ads..... this is where google is today. Leave integrity of SERPs alone- go after the content of millions of other pages to show ads in context....

Xoc




msg:1235886
 7:30 pm on Apr 13, 2003 (gmt 0)

Just to give you some contrast. Here are Microsoft's revenues for several Fiscal years:

1986 $198 Million
1987 $346 Million
1988 $591 Million
1989 $809 Million
1990 $1.18 Billion
...
2002 $28.3 Billion

(source [microsoft.com ])

So Google currently is where Microsoft was between FY 1987 and FY 1988, and actually growing faster.

daroz




msg:1235887
 7:31 pm on Apr 13, 2003 (gmt 0)

One question about the article...

All the information I've seen on the network Google runs (the clusters specifically), indicates somewhere in the neighborhood of 15,000 servers. (+- a few thousand)

Some sources include lectures given as recently as last November by Google staff.

While I don't doubt Google could pull off almost a 400% increase in computing power in a short time, what I do doubt is the cooling capicity in the existing datacenters to handle that kind of very very very aggressive growth.

Can anyone point me to someplace I can confirm the NYT figure (or disproove my own)?

edit_g




msg:1235888
 10:43 am on Apr 14, 2003 (gmt 0)

Mr. Page, a 30-year-old software designer...

That sounds wrong... Maybe understating his achievments just a tad...

Richmond8




msg:1235889
 10:24 pm on Apr 14, 2003 (gmt 0)

When are they ever going to go public?

jeremy goodrich




msg:1235890
 10:32 pm on Apr 14, 2003 (gmt 0)

>All the information I've seen on the network Google runs (the clusters specifically), indicates somewhere in the neighborhood of 15,000 servers. (+- a few thousand)

The NY Times article is the 1st one that has had a new 'official' number from Google.

The last one put out was several years old...and, stories have been circulating with 'guesses' though - nothing straight from the horses mouth till this one.

>>When are they ever going to go public?

Welcome to WebmasterWorld, richmond8
by your post count, you must be new

I'd stick to reading this forum - about the future Google IPO - to get a handle on when :)

madweb




msg:1235891
 8:51 am on Apr 19, 2003 (gmt 0)

it would be a little embarrassing to miss the projected growth numbers by several million.

Yes, except that google don't publish results as they are privately held.

This 35 message thread spans 2 pages: 35 ( [1] 2 > >
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