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March 8, 2006

Google Oops, Part Deux

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In the spirit of no good deed goes unpunished, JenSense is reporting that Google Analyst Day was seemingly a day of follies for the guys at the Goog. The mighty engine caught slack earlier in the week for accidentally referring to the existence of GDrive and now they’re back in the spotlight (as though they ever left) for ‘inadvertently’ leaking projected revenue information. The goof forced Google to file a form 8K with the Security Exchanges Commission yesterday, a form filed by corporations to report previously undisclosed changes important to investors. It read in part:

"On March 2, 2006, Google Inc. posted its Analyst Day presentations on its Investor Relations website, http://investor.google.com/. The initial posting inadvertently contained certain annotated comments not intended to be presented at Analyst Day, including the following statements:
Our ads business

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

But strong competitors

  • AdSense margins will be squeezed in 2006 and beyond";
  • Execute well on our core ads projects to help us exceed the $9.5bn target (and backfill any AdSense partner loss)

In terms of estimating [stock-based compensation] charges for 2006

  • 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 slipup reportedly occurred when the revenue information was accidentally placed in with the Google Analyst Day slides. Oops. The material included a revenue projection of 9.5 billion (an increase from $6 billion this year), and indicated a projected ‘squeeze’ in AdSense profit margins due to increased competition.
According to Google, the comments in question were intended speaker notes prepared early in the fourth quarter of 2005 for an internal product strategy presentation. In its S.E.C. filing, Google said, “These notes were not created for financial planning purposes, and should not be regarded as financial guidance.” Unfortunately, if they’ve looked at their stock today they know it’s too late. People seem to be taking the projections seriously.

The leaked blunder is the second in two weeks for the folks at Google. On Feb. 28, Google Chief Financial Officer George Reyes told a Merrill Lynch & Co, Inc conference that he expected Google’s revenue growth to decline. Google stock fell in suit.

Attention Google: Stop talking. Invent more tools.

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