Looking for change at Google
Google announces second-quarter financial results after the closing bell on Thursday. Investors, who have been worried about how much the tech giant is bringing in and how much it’s spending, will be paying close attention to see if Google’s reining in costs.
Earlier this week came indications Google might be tightening up the ship by hiring fewer people, with 1,810 new hires in the first quarter, contrasted with an average of 2,435 new employees per quarter last year, according to the Wall Street Journal.
Mark Mahaney of RBC Capital Markets says Google has to do more to soothe worried Wall Street. “There’s concern that Google’s core advertising revenue rates are slowing. That they cannot or will not do a tough enough of a job … managing expenses,” Mahaney says.
Among the concerns is that Google is losing ground in search ads to mobile platforms like Facebook and others.
“All those concerns that people have, they look backwards,” says Carlos Kirjner of Bernstein Research, who believes Google still has room to grow. The company is investing in new technologies like self-driving cars, which could pay off in the future. It’s also investing in current moneymakers: Android and search.
“All of these require computer science, and engineering and infrastructure,” Kirjner says.
Still, Google spent an unusually high amount last year, Kirjner says, and he’s looking for that spending to slow down.
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