How long can Google keep growing?
TEXT OF STORY
Kai Ryssdal: Now here’s a thought on which to pin your economic hopes. That as Google goes, so goes the economy. The search engine giant announced this afternoon its revenue grew 23 percent in the first quarter of the year. The company credits what it calls a profound and positive trend in the online advertising business. Earnings did beat Wall Street expectations, but still shares fell in after-hours trading.
Our senior business correspondent Bob Moon explains there are some worries about how long Google can keep on topping itself.
BOB MOON: It’s as if the financial crisis was just a speed bump for Google. The company is back to its pre-recession earnings levels, but the challenges it faced then, are the same questions being asked anew: How can a company that’s based nearly all its growth on search advertising keep flying so high?
Richard Fetyko is an analyst with Merriman, Curhan and Ford. He points out most of Google’s earnings still come from the same place.
RICHARD FETYKO: We think that search still represents 90 percent of their business, and therefore, you know, some of the other things are really just noise at this point.
Other things, as in YouTube — the site that’s responsible for 40 percent of all video traffic online. Google has added banner ads to YouTube’s home page, and has made deals for original content. Fetyko says that’s helped — some.
FETYKO: The monetization on the home page and some of the original, professional content has improved dramatically now. That hasn’t changed the fact that the company’s still very much driven by what happens in their core search business.
Another huge area of potential growth may yet be threatened by Google’s ongoing spat with China.
Shar VanBuskirk at Forrester Research thinks Beijing and Google will ultimately settle that dispute.
SHAR VANBUSKIRK: Google, because China’s such a huge opportunity; China, because they want very badly to sort of move into a more industrial economy, become more of a global power and be recognized around the world as a modern force. So I think on both sides, over the next few years we’ll see compromise being reached.
In the meantime, today’s results do offer investors short-term reassurance: Google’s bread-and-butter business looks as strong as ever.
I’m Bob Moon for Marketplace.
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