Google Q2

Firstly we had Google smashing expectations with their Q2 earnings numbers. Net revenue was at $6.92bn (up 32% from last year) vs consensus of $6.75bn. The big question was profits however as investors were worried about the increasing costs that Google were incurring after making some big investments in staff and capital. EPS came in at $8.64 vs consensus of $7.68. Annualise that and we get $34.56 and a PE of 15 assuming no growth from this quarter (I'd say that is highly unlikely). Like I mentioned earlier the stock is trading up 12.6% after hours so we should be expecting an open in the region of $595. How the analysts were wrong.

Anything interesting from the numbers? Operating expenses were up almost $1bn from last year to $2.97bn but down from last quarter's $3.34bn. Again this was expected. And we can see the expansion taking place in front of our eyes. Google+ already has 10 million subscribers after just 2 weeks according to Larry Page. That's 715 000 subscribers a day. Mr Page was very optimistic saying the opportunities were endless and that they were still in the early stages of what they want to achieve. He reckons the Android mobile-device software and the Chrome web browser still have huge potential. As an avid Apple fan who is terribly bias I must admit I have heard good things about the Android platform.

I have said before that this company is on the path to ruling the world and I still stand by that. I am not one to worry about a margin squeeze when a company is pumping money back into the system seeking organic growth. In fact I prefer it. Larry Page, well done on your first earnings presentation as CEO.