Friday, October 15, 2010

Google Q3 Earnings Conference Call (Review, Notes, Audio) "Explosive growth in the digital economy" GOOG


Google reported Q3 earnings on Thursday, October 14

Google Q3 2010 Earnings Conference Call

The Google September Q3 2010 earnings conference call audio has been posted on the Google Earnings Conference Call page with extensive notes and review.

Google Reports Excellent Q3 Earnings

Financial charts of Google data and related commentary have been updated on the Google Financial Performance page for the September Q3 2010 financial results reported by Google. The charts are:

Google Financial Performance by the Quarters
Earnings per Share and Cash Flow per Share
Net Revenues, Operating Income, Net Income
Gross, Operating, & Net Margins
Return on Assets
Total Revenues and Earnings per Share Growth
Revenue Sources
Traffic Acquisition Costs
Geographic Revenues

Income Statement Q3 Google financial performance was excellent with total revenues $7,286B, net income $2,167B, and earnings per share $6.72. From the prior quarter Q2 2010, total revenues were up +6.8%, net income up +17.8%, and earnings per share up +17.7%. From the prior year Q3 2009, these were up +22.6%, +32.3%, and +30.99%, respectively. Gross, operating, and net margins were also above the prior quarter Q2 2010 and the prior year Q3 2009. Cash Flow from Operations per Share was an amazing $8.95. All of this data is summarized in the charts below.

Balance Sheet Q3 Total assets increased +$5.297B, or +11.0%, from $48.045B to $53.342B. However, total assets are inflated by new balance sheet line items, an asset "Receivable under repurchase agreements" of $875M and a liability, "Securities lending payable" of $2.861B. As a result, return on assets is negatively impacted by these investment operations, i.e., assets are increased significantly without corresponding revenues from the core business. This reduces net income and reduces return on assets, as can be seen on a chart below. These new investment items also reduced the capital to assets ratio (total stockholders' equity divided by total assets) to 81.2%, compared to 84.5% in the prior quarter Q2 2010. However, this ratio still excellent. Google is incredibly liquid with a current ratio (current assets divided by total assets) of 73.95%, which is a multi-year high and is also increased by the new balance sheet items.

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