Stocks show expectation, not always reality
Late last week Google reported its Q2 results. If you’ve been reading any of the financial headlines then I couldn’t blame you for thinking the latest set of financial results was troubling. The traditional tech and financial media is ripe with stories about how the Mountain View search giant missed revenue estimates, fell short on earnings and is seeing pressure on the price per click it charges advertisers.
As is often the case in financial reporting, the headlines don’t match reality. If you happen to be a shareholder (as I am) then you can rest assured Google is chugging along just fine. Android users need not worry, as the mothership is poised to make more money than ever before, ensuring lots more awesome product development.
The quick numbers: Google brought in $14.1 billion in quarterly revenue, and this includes Motorola, which was acquired in 2012. Wall Street was expecting Google to bring in $14.4 billion, so the top line was mildly disappointing. But here’s what most headlines miss: Google is primarily an advertising company that cares about long-term quality. Sometimes it changes its policies and kicks some lousy advertising to the curb. That’s what it did in Q2, forcing some advertising partners to either comply with the new rules or leave. Google does this semi-regularly, and it has a small effect on revenue for the quarter.
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