Google Spreads Itself Thin: Fool by Numbers

On Jan. 31, global search and advertising mogul Google (Nasdaq: GOOG  ) released earnings for the 2007 fiscal year, a period ended Dec. 31.

  • Google missed the consensus earnings target for the fourth quarter by a mere $0.01 per diluted share. To put the magnitude of the miss into perspective, imagine that the company had done a 10-for-1 stock split to put the share price in the $50 range. The miss would then have been two-tenths of a cent, or a mere rounding error.
  • As early Googlers vest their stock options and cash them in, share dilution is becoming a real issue here. The company has never bought and retired a share of its own stock, and it still doesn't have any repurchase authorizations from the board of directors.
  • That cash account is growing mighty fat, and it could go a long way toward correcting that dilution issue -- if the mood strikes.
  • There's change afoot in the online search market, now that Microsoft (Nasdaq: MSFT  ) has put up a bid for Yahoo! (Nasdaq: YHOO  ) . Read all about it.

(Figures in millions, except per-share data.)

Income Statement Highlights

FY 2007

FY 2006

Change

Sales

$16,594

$10,605

56.5%

Net Profit

$4,204

$3,077

36.6%

EPS

$13.29

$9.94

33.7%

Diluted Shares

316.2

309.5

2.2%

Get back to basics with the income statement.

Margin Checkup

FY 2007

FY 2006

Change*

Gross Margin

59.9%

60.2%

(0.2)

Operating Margin

30.6%

33.5%

(2.8)

Net Margin

25.3%

29.0%

(3.7)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

FY 2007

FY 2006

Change

Cash + Short-Term Investments

$14,219

$11,244

26.5%

Accounts Receivable

$2,163

$1,322

63.5%

Liabilities

FY 2007

FY 2006

Change

Accounts Payable

$282

$211

33.6%

Long-Term Debt

$0

$0

N/A

The balance sheet reflects the company's health.

Cash Flow Highlights

FY 2007

FY 2006

Change

Cash From Operations

$5,775

$3,581

61.3%

Capital Expenditures

$2,403

$1,903

26.3%

Free Cash Flow

$3,373

$1,678

101.0%

Owner Earnings

$2,769

$1,747

58.5%

Free cash flow is a Fool's best friend.

Competitive Context

Market Cap

Trailing P/E Ratio

CAPS Rating (Out of 5)

Microsoft

$303,408

18.6

***

Google

$166,323

39.6

**

News Corp. (NYSE: NWS  )

$59,290

18.6

***

eBay (Nasdaq: EBAY  )

$35,354

106.2

***

Yahoo!

$27,811

40.4

**

Using the latest reported numbers from Capital IQ, a division of Standard & Poor's. Keep your partners close and the competition in your vest pocket.

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