$3 Million Per Hour



By: YOSEF TASTASSA  
Published: January 21st 2011
in Economics » World

Left to right, Eric E. Schmidt, Sergey Brin and Larry Page of Google

True or false?

 

While walking down the street with my wife yesterday, I saw two familiar faces approaching. "Look", I said to my wife, "These two young men earned $3 million dollars per hour during the last three months. They even earned that money while sleeping", I added.

 

My wife gave me the look said, "Yeah, sure, my grandfather is the Emperor of Japan and my grandmother is the Queen of the Netherlands. Don't joke in front of the kids, they might believe you.”

 

The above is of course fictional; my wife's grandparents are ordinary Jews from Asia and I don't walk in minus 20 weather.  However, these two young men do exist.  They are Larry Page and Sergey Brin, founders of Google, and the number I stated is completely true.

 

Google earnings

 

Yesterday Google released its fourth quarter results for the Fiscal Year 2010. Google's revenues for the 92 days period which started in October 1st and ended December 31st were $6.37 billion. The unbelievable average revenue per hour for that period was $2,884,963.

 

The bottom line was incredible earnings of $7.81 per share, higher than the analysts' expectations. Despite a negative sentiment in the market yesterday, Google (NASDAQ – GOOG) surged in the afterhours trading by 1.3 per cent to $635 per share. The trading volume was only $5.5 million.

 

The market value of Google after yesterday's closure was $200 billion. It was founded only in 1998.

 

By the end of 2004 the shares were trading at around $100 each. A rough estimation shows that investors who held the shares for this period of time earned 100 per cent every year.

 

Who, where, why 

 

The word Google comes from the word Googol. It is a mathematic expression that means the digit 1 with 100 zeros after it

 

Googol is not just a number and Google is not just a name. The Algorithm was invented by Larry Page and Sergey Brin in 1997 and the rest is history. Around 50 per cent of the world's internet surfers use Google on daily basis. The "Search Engine" analyzes trillions of commands as we speak. It serves 124 different languages and according to Wikipedia it even serves fictional languages like Star-Trek Klingon language and the Muppet Show Swedish Chef language.

 

Google has thousands of employees around the world, it has a worldwide network of hundreds of thousands of servers and it's considered a great company to work for.

 

Freedom for all?

 

Parallel to the freedom of speech, Google is very much responsible for the freedom of information and worldwide data sharing. Some non-democratic regimes around the world saw Google as a threat to their national security. The most famous "Data War" was waged between Google and China in the beginning of 2010. China wanted to block some contents, Google refused. The Chinese blocked Google in China mainland, and as a response Google transferred its Chinese surfers to its servers in Hong-Kong where the Chinese censorship is very limited.

 

Baidu

 

The only winner from the China-Google struggle was "Baidu" (NASDAQ – BIDU), the Chinese search engine is an alternative to Google. In 2006 Baidu was traded around $5 per share. The closure in New-York yesterday was $105.66, a magnificent profit of 2,500 percent in less than five years.

 

If you are an investor that believes that the Asian economic boost is just the beginning and that the progress will reach any remote village in China, Baidu should be a company to look at.

 

Not all is perfect

 

Despite the perfect performance of Fiscal Year 2010 and the unexpected revenues and excellent performances, Google surprisingly announced yesterday a major structural change. Google’s CEO for the last ten years, Mr. Eric Schmidt, will be leaving his position in April 2011 and will be replaced by Larry Page, one of Google's founders. Schmidt will still have a key role in Google and "Business is as usual" are the messages told to nervous investors. Only time will tell.

 

This article does not recommend investing in the capital market. 



Related articles: (Google, Earnings, Larry Page, Eric Schmidt, )

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