Google Announces Record Revenues for Fourth Quarter and Fiscal Year 2004

America's favorite online search engine, Google (GOOG) surged 12.5 percent to a new high Wednesday as Google.com, Google Video (launched last week), Froogle, and all of Google Inc.'s products and services have contributed to earnings of $204.1 million, or 71 cents per share, during the final three months of 2004.

Revenue for the period totaled $1.03 billion, more than doubling from $512.2 million in the prior year.

Google AdWords is a business model that is continuing to prove itself in the marketplace.

Google's record revenues for the quarter ended December 31, 2004, were up 101% year over year.

Last summer, Google's closely watched IPO was priced at $85 after the company couldn't persuade enough buyers to pay its original target range of $108 to $135.

On Wednesday morning, Google's stock jumped $24.07 to $215.97 on the Nasdaq Stock Market, setting a new high-water mark for the stock.

After the close of the stock market on Tuesday, the company reported that its fourth-quarter profit improved seven-fold from the previous year.

At the same time last year, net income was $27.3 million, or 10 cents per share.

After subtracting commissions paid to other Web sites in its advertising network, Google's fourth-quarter revenue came to $653.5 million, up from $296 million in the previous year.

Google is thriving because more advertisers are paying a steadily rising price to have their Web links displayed alongside search results.

Advertisers pay Google and its partners, which include AOL and Ask Jeeves Inc., whenever visitors click on the text-based commercial links.

Google CEO Eric Schmidt said on Tuesday:

Google had an exceptional quarter.

Revenues and profits increased significantly, our execution was solid across the company and most importantly, our relationship with our users, partners and advertisers became even stronger.

All of this happened while we continued to innovate, expand around the world and make strategic, long-term investments.

Caris & Co. analyst David Garrity said:

One could argue there is still plenty of headroom here.

Granted, nothing can grow to the sky, but there doesn't appear to be much of a ceiling for Google right now.

Based on Tuesday's closing stock price, Google's market value was $55 billion.

To put this in perspective, $55 billion is more than General Motors Corp. (GM) and Ford Motor Co. (F) combined.

Google's stock carries a price-to-earnings ratio of nearly 230, an extremely high multiple for a measure that is widely used to determine the relative value of a company's shares. By comparison, other well-known -- and older -- Internet companies such as Yahoo Inc. (YHOO), Amazon.com Inc. (AMZN) and eBay Inc. (EBAY) have price-to-earnings multiples ranging between 58 and 68, although none of those companies are growing as quickly as Google.

A Rich Valentine's Day Ahead

Valentine's Day 2005 at Google will not only be filled with chocolate and red roses. On February 14th, hundreds of Google employees will have the opportunity to sell some of their shares for the first time with the expiration of the traditional six month lock-up after an IPO. With the expiration of the lock-up, selling restrictions on 176.8 million shares of stock will be lifted.

For some, their investment of time has made them millionaires on paper only. As of Valentine's Day they will be "paper millionaires" no more.

For those like us who do not yet own Google stock, perhaps this will be your opportunity to get in on this hot commodity.

For all of 2004, Google earned $399.1 million, or $1.46 per share, on revenue of $3.19 billion.

In 2003, the company earned $105.6 million, or 41 cents per share, on revenue of $1.47 billion.

Eric Schmidt told The Wall Street Journal today:

We've prioritized international expansion for 2005 extremely highly.

Google plans to focus primarily on building up their own operations rather than acquiring companies. Asia, and particularly China, is a key market for Google. Last June, Google made an investment of an undisclosed size in Baidu, the leading search engine in China. That investment seems likely to appreciate in value as it was widely reported on Monday that Baidu will go public later this year.

About Google

Google is dedicated to providing the best search experience on the web. Google has its own search destination site at http://google.com. Google also offers co-branded solutions for information content providers.

Google was founded in September 1998 by Larry Page and Sergey Brin, building on three years of research as computer science Ph.D. candidates at Stanford University.

The Company's name is derived from "Googol," the name for the number 1 followed by 100 zeros, and reflects the immense amount of information available on the Internet.

Google's mission is to organize the world's information, making it universally accessible and useful.

Google is based in Palo Alto, California.

Google received venture funding from Kleiner Perkins Caufield & Byers and Sequoia Capital before going public last fall. Other initial investors included Stanford University; Andy Bechtolsheim, co-founder of Sun Microsystems and current Vice President at Cisco Systems; and Ram Shriram, former President of Junglee and Vice President of Business Development at Amazon.com.

Google's top management includes:

Dr. Eric E. Schmidt, Chairman of the Executive Committee and Chief Executive Officer

Sergey Brin, Co-Founder & President, Technology
Larry Page, Co-Founder & President, Products

George Reyes, Chief Financial Officer

Wayne Rosing, Senior Vice President, Engineering

Omid Kordestani, Senior Vice President, Worldwide Sales and Field Operations

Jonathan Rosenberg, Vice President, Product Management

David C. Drummond, Vice President, Corporate Development

Shona Brown, Vice President, Business Operations

Their Board of Directors include: Dr. Eric E. Schmidt, Sergey Brin and Larry Page of Google Inc., star venture capitalists, John Doerr of Kleiner Perkins Caufield & Byers and Michael Moritz of Sequoia Capital, Ram Shriram of Sherpalo Ventures, Dr. John Hennessy Stanford University's 10th President, Dr. Arthur D. Levinson Chairman & CEO of Genentech since 1995 and Paul Otellini, Intel's President and Chief Operating Officer.

On a worldwide basis, Google employed 3,021 full time employees as of December 31, 2004, up from 2,668 as of September 30, 2004.

Hoping to lure even more employees, Brin told analysts that the company is distributing big baskets of restricted stock to workers who develop promising technology.

Congratulations to all those who believed in Google from day one, to the 3,021 people who believe in Google every day, and to all of the advertisers who are giving investors good reason to keep investing in this Wall Street darling.

Inspire & Be Inspired.

Here's to healthy, adventuresome, soulful, "googly" living -- all the way to the bank!

~ Jennifer Carolyn King