Why Google's Less Than Expected Earnings Don't Worry Me in the Least
In terms of Internet-driven companies, Google is the living breathing definition of the success attained through hard work and innovation. The company, originally formed as part of a side-project on the part of a few eager college students on a mission to index the Internet, has managed to become a large-scale enterprise that is just as profitable as it is influential.
For years now this influence and profit has been entirely evident in Google’s noteworthy road to success. The company has done very well for itself by expanding beyond its original search engine foundation, and has (for the most part) done well with newer services such as Gmail and Google Apps; services that have been a wild success amongst individuals and businesses of all sizes alike. However, more recent news has shed a critical light on Google’s success after the company failed to meet profit expectations in their last quarterly posting. But even though this news doesn’t seem to have set very well with some investors that have opted to side with caution after the news came out earlier this week, I honestly am not buying into the fear of Google’s failure.
The big thing to realize about the recently released news is that Google is still expanding and has even seen a growth in sales, which indicates that they are still seen as a relevant company worth doing business with. What this means is that even though Google hasn’t lost any market presence or overall business, their costs of doing business and operating overhead has gone up; ultimately impacting their profits. And in all honesty, the fact of the matter is that every industry is seeing similar increases in costs these days; regardless of if the industry pertains to technology or not.
Moreover, a significant part of Google’s 54% jump in operating costs is attributed to their recent hiring spree that many believe suggests Google is in the midst of developing and releasing a new service (possibly a social network) that will ultimately increase the Internet-giant’s profits.
To me it seems that Google’s slump in profits is to be expected until their current project goes live and provides a return on investment. So really, I’m confused as to why all of the investors that are pulling out now are doing so, as they are essentially giving up on the potential return on investment that could potentially be seen by individuals who opt to ride out Google’s lows.
When looking at Google in the long-term, I see countless opportunities for the company to grow, and am not concerned with their success at all. The only worrisome thing that I see is that Google is starting to be seen as a liability for some. This, I think, could damage Google’s image and indirectly cause them to lose business and potential profit; not because of an actual problem with the company’s operations, but rather a perceived downfall and false alarm.
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