Tuesday, March 07, 2006

Google Inadvertently Releases Financial Projections

Google filed an interesting 8-K today. After Google's Analyst Day on March 2, Google meant to post the slides for that day's presentations on the investor relations section of its website. Unfortunately for Google, they also posted some comments prepared in early fourth quarter 2005 which were not meant for public consumption. They quickly removed the information from the website, but now in the interest of fairness (and not wanting to be sued), they're releasing the information via a SEC 8-K filing. Here's the scoop:


“Our ads business for the moment is healthy and growing and we’re on a strong trajectory


• projected to grow from $6bn this year to $9.5bn next year based purely on trends in traffic and monetization growth.

But strong competitors are attempting to aggregate traffic

• AdSense margins will be squeezed in 2006 and beyond”;

“To really get down to brass tacks, we’re going to: Execute well on our core ads projects to help us exceed the $9.5bn target (and backfill any AdSense partner loss) and drive advertiser satisfaction”; and
“In terms of estimating [stock-based compensation] charges for 2006, there are two things to consider:


• The amount of the charge related to awards issued prior to 2006 AND the new awards that are issued throughout 2006


• The first part, the amount related to grants prior to 2006, is $342 mm”

The statements regarding $9.5 billion in 2006 ad revenue and AdSense margins were not speaker notes prepared for the Analyst Day presentation, and were inadvertently included in the Analyst Day slides. These statements were instead speaker notes prepared early in the fourth quarter of 2005 for an internal product strategy presentation. These notes were not created for financial planning purposes, and should not be regarded as financial guidance. Consistent with past practice, Google is not providing revenue guidance. In addition, the statement with respect to AdSense margins does not reflect Google’s current expectations.

The statements regarding stock-based compensation were also inadvertently included in the Analyst Day slides. However, the statement regarding the stock-based compensation charge of $342 million, which relates to stock awards granted to employees and directors prior to 2006, is a materially accurate reflection of Google’s current expectations.

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