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Google Announces Fourth Quarter and Fiscal Year 2005 Results
1/31/2006 4:02:02 PM
MOUNTAIN VIEW, Calif., Jan 31, 2006 (BUSINESS WIRE) -- Google Inc. (GOOG) today announced financial results for the quarter and year ended December 31, 2005.
"We are very pleased with our results for the fourth quarter as we achieved excellent performance across our businesses," said Eric Schmidt, CEO of Google. "We generated significant revenue growth in our core search and advertising business, driven by continued strength in traffic and monetization. We will continue to invest significantly as we develop innovative new products and as we extend our core technologies to new user access points and to different channels."
Q4 Financial Summary
Google reported revenues of $1.919 billion for the quarter ended December 31, 2005, an increase of 86% compared to the fourth quarter of 2004 and an increase of 22% compared to the third quarter of 2005. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs, or TAC. In the fourth quarter, TAC totaled $629 million, or 33% percent of advertising revenues.
Google reports operating income, net income and earnings per share (EPS) on a GAAP and non-GAAP basis. The non-GAAP measures are described below and reconciled to the corresponding GAAP measure in the section below titled "About non-GAAP financial measures."
-- GAAP operating income for the fourth quarter was $570 million, or 29.7% of revenues. This compares to GAAP operating income of $529 million, or 33.5% of revenues, in the third quarter. Non-GAAP operating income in the fourth quarter was $718 million, or 37.4% of revenues. This compares to non-GAAP operating income of $596 million, or 37.8% of revenues, in the third quarter.
-- GAAP net income for the fourth quarter was $372 million as compared to $381 million in the third quarter. Non-GAAP net income was $469 million, compared to $437 million in the third quarter.
-- GAAP EPS for the fourth quarter was $1.22 on 304 million diluted shares outstanding, compared to $1.32 for the third quarter, on 290 million diluted shares outstanding. Non-GAAP EPS was $1.54, compared to $1.51 in the third quarter.
-- Our effective tax rate for the fourth quarter increased to 41.8% this quarter, and to 31.6% for the year, above our previously announced expectation of approximately 30% for the year. Primarily because the proportion of total expenses allocated to our international operations was greater than we anticipated, more of our profits were taxed at a higher domestic tax rate; this resulted in a greater effective tax rate compared to our expectations. We expect our effective tax rate for 2006 to be approximately 30%.
-- Non-GAAP operating income, non-GAAP net income, and non-GAAP EPS are computed net of certain material items: stock-based compensation (SBC), in-process research and development (IPR&D) charges, and also Google's contribution to the Google Foundation of $90 million, which the company made in the fourth quarter of 2005. In the fourth quarter, the charge related to stock-based compensation was $58 million as compared to $46 million in the third quarter. IPR&D charges were immaterial in the fourth quarter of 2005, compared to $21 million in the third quarter. Tax benefits related to stock-based compensation charges and the contribution to the Google Foundation have been excluded from non-GAAP net income and non-GAAP EPS. The tax benefit related to SBC was $14 million in the fourth quarter and $11 million in the third quarter, and the tax benefit related to the contribution to the Google Foundation in the fourth quarter was $37 million. Google does not expect to make further donations to the Google Foundation for the foreseeable future. Reconciliations of non-GAAP measures to GAAP operating income, net income, and EPS are included at the end of this release.
Q4 Financial Highlights
Revenues -- Google reported revenues of $1.919 billion for the quarter ended December 31, 2005, representing an 86% increase over fourth quarter 2004 revenues of $1.032 billion, and a 22% increase over third quarter 2005 revenues of $1.578 billion. Growth over the third quarter was driven by expected seasonal strength in both traffic and monetization. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs, or TAC.
Google Sites Revenues -- Google-owned sites generated revenues of $1.098 billion, or 57% of total revenues. This represents a 24% increase over the third quarter revenues of $885 million.
Google Network Revenues -- Google's partner sites generated revenues, through AdSense programs, of $799 million, or 42% of total revenues. This is an 18% increase over network revenues of $675 million generated in the third quarter.
International Revenues -- Revenues from outside of the United States contributed 38% of total revenues, compared to 39% in the third quarter of 2005 and 35% in the fourth quarter of 2004. International revenues reflected the unfavorable impact caused by the appreciation of the U.S. dollar and stronger seasonal trends in the U.S. relative to the international business. Had foreign exchange rates remained constant from the third quarter through the fourth quarter, our revenues would have been $12 million, or 0.6%, higher. Had foreign exchange rates remained constant from 2004 through 2005, our revenues would have been $40 million, or 2.1%, higher.
TAC -- Traffic Acquisition Costs, the portion of revenues shared with Google's partners, increased to $629 million in the fourth quarter. This compares to TAC of $530 million in the third quarter. TAC as a percentage of advertising revenues decreased to 33.2% in the fourth quarter from 34.0% in the third quarter, reflecting primarily the continued shift in our revenue mix from Google network revenue to Google-owned site revenue.
Operating Income -- GAAP operating income in the fourth quarter was $570 million, or 29.7% of revenues. This compares to GAAP operating income of $529 million, or 33.5% of revenues, in the third quarter. GAAP operating income in the fourth quarter includes a contribution of $90 million to the Google Foundation. Non-GAAP operating income in the fourth quarter was $718 million, or 37.4% of revenues. This compares to non-GAAP operating income of $596 million, or 37.8% of revenues, in the third quarter. The favorable shift in the mix of revenues to a higher proportion of revenues from Google-owned sites was offset by significant investments in all areas of the business.
Stock-Based Compensation -- In the fourth quarter, the charge related to stock-based compensation was $58 million as compared to $46 million in the third quarter. The increase in stock-based compensation was primarily related to Google stock units issued in 2005.
Stock-based compensation in 2006 will be significantly greater than it was in 2005 as a result of our adoption of SFAS 123R effective January 1, 2006. We currently anticipate that dilution related to all equity grants to employees will be approximately 1% to 1.5% per year.
Net Income -- GAAP net income for the fourth quarter was $372 million as compared to $381 million in the third quarter. Non-GAAP net income was $469 million, compared to $437 million in the third quarter. GAAP EPS for the fourth quarter was $1.22 on 304 million diluted shares outstanding, compared to $1.32 for the third quarter, on 290 million diluted shares outstanding. Non-GAAP EPS was $1.54, compared to $1.51 in the third quarter.
Income Taxes -- Our effective tax rate for the fourth quarter increased to 41.8% this quarter, and to 31.6% for the year, above our previously announced expectation of approximately 30% for the year. Because the proportion of total expenses allocated to our international operations was greater than we anticipated, more of our profits were taxed at a higher domestic tax rate; this resulted in a greater effective tax rate compared to our expectations. We expect our effective tax rate for 2006 to be approximately 30%.
Cash Flow and Capital Expenditures -- Net cash provided by operating activities for the fourth quarter totaled $658 million as compared to $647 million for the third quarter. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the fourth quarter we generated $413 million in free cash flow. Capital expenditures in the quarter were $245 million as compared to $293 million in the third quarter, and primarily reflect purchases of production servers and networking equipment and acquisitions of additional office space.
We will continue to invest significantly in capital expenditures in 2006. We expect the majority of the investment to be focused on IT infrastructure including servers, networking equipment, and data centers, as well as real estate and campus facilities.
Adjusted EBITDA -- Adjusted EBITDA is another non-GAAP measure of liquidity and is defined as income before interest, taxes, depreciation, amortization, SBC, IPR&D, and the contribution to the Google Foundation. Adjusted EBITDA increased to approximately $814 million in the fourth quarter from $672 million in the third quarter, or 43% of revenues for both periods.
Reconciliations of free cash flow and adjusted EBITDA to net cash provided by operating activities, the GAAP measure of liquidity, are included at the end of this release.
Fiscal Year 2005 Financial Highlights
Revenue -- For the year ended December 31, 2005, Google reported total revenues of $6.139 billion, an increase of 92.5% over revenues of $3.189 billion in 2004. Revenue growth was attributable to both Google sites and Google network sites.
Google Sites Revenues -- Revenue from Google sites increased 112.5% in 2005 to $3.377 billion as traffic to Google sites continued to grow and monetization improved.
Google Network Revenues -- Revenue from the Google network increased 72.9% in 2005 to $2.688 billion due primarily to increased contribution from existing partners as well as the addition of many new partners to the AdSense for Search and AdSense for Content programs.
International Revenues -- Revenues from outside of the United States contributed 39% to total revenues for the year compared to 34% in 2004.
Operating Income -- GAAP operating income in 2005 was $2.017 billion, compared to $640 million in 2004.
Net Income -- GAAP net income for 2005 increased to $1.465 billion, from $399 million in 2004.
Cash Flow and Capital Expenditures -- Net cash provided by operating activities was $2.459 billion, compared to $977 million in 2004. Capital expenditures in 2005 were $838 million, an increase of 163% from $319 million in 2004. Free cash flow was $1.621 billion, an increase from $658 million in 2004.
Adjusted EBITDA -- Adjusted EBITDA increased to $2.624 billion in 2005 from $1.280 billion in 2004.
Cash -- As of December 31, 2005, Google had cash, cash equivalents and marketable securities of $8.0 billion.
On a worldwide basis, Google employed 5,680 full time employees as of December 31, 2005, up from 4,989 as of September 30, 2005 and 3,021 as of December 31, 2004.
Webcast and conference call information
A live audio webcast of Google's fourth-quarter and fiscal year 2005 earnings release call will be available at http://investor.google.com/news.html. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, the financial tables, as well as other supplemental information including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, are also available at that site. A replay of the call will be available beginning at 7:30 PM (ET) through midnight Tuesday, February 7, 2006 by calling 888-203-1112 in the United States or 719-457-0820 for calls from outside the United States. The required confirmation code for the replay is 4135040.
More at http://www.marketwatch.com/tools/quotes/newsarticle.asp?siteid=mktw&sid=1795093&guid=%7B53D1...
Hey dieselfuel,
I think GOOG is in an uptrend that has a good chance of continuing on up........ will they beat......breakeven.......disappoint.....will they sell it......buy it??
I dunno,
Fletch
GOOG actually wedging here.......which way....? I'd guess up....
Thanks...... I see,
Fletch
Kind of like AAPL and GOOG....NWRE might offer a entry here.....if not in
Just to throw in a couple more,
Fletch
I'm not in CNXT and ATML but am in BRCM CIEN + RMBS.....nite nite buds..
What my 69 Z looks like,
Fletch.....
grille on my car is still silver......not blacked in...it's covered + kept in the garage......
Glad I have some VRSN now........
Thanks south louisiana,
Fletch
I've always been a tech junky.........
No PAAS......not in silver cept what silver GG has..........
But GG has a bunch of silver,
Fletch
GG broke up from acending wedge.....I hope the pack blows away ........Oil n Gold!
Oil ran today ........still in........NOV
Have some VLO........
Good Ol CHK......
Hey........we have a blue up E on NENG,
Fletch,
A good day from a wedge for AVNX.....
Another wedge makes DVW go up.....day two now......
No......the surprise is Sony and USU beating BRCM really ........I'm very similar in that I'm usually way too early myself ......I was in oil and gold way before they ran........sold a lot of them early to get into the pack ........but kept enough......
It's more about finally getting a good going up market IMO....
Now if we hit a peak to sell and buy the next bottom......OR
As long as we get out before...............
The next Big Bear,
Fletch
A very nice chart.......almost parabolic...... :>) ....am holding all those in that chart.
This one still AOK....
A surprise or two here,
Fletch
To me anyway.............
So.....I add some more JNPR,
Fletch
Carp......the wife also owns BRCM......sshhh
I hold a little too......but...... I have no problem being the dummy of the family...........
Hey wahz,
I added to JNPR myself.......long base.....looked safe and ready to go.......so DOWN it went........NG.....
The wife will be happy with Sony,
Fletch
After being.....as Pink Floyd said...comfortably numb for the last 4 er 5 years ...... parabolic and way up........ very OK ...
lets get it on....cause...
I'd love it,
Fletch
As far as seeing anything in the space picture below......I can see a possible ear.......I really see cool space pictures.....beyond that.......we all on our own imagination............
What's moving,
Fletch
Me too.....I see they even lost the P/E ratio,
Fletch
You must be feeling................after today+market wise.......just a bit "less nervous"....I am??
Yes......VTSS fine as well.............
None in my folios tho,
Fletch
Hey buddy,
FNSR doing fine.......MRVC.....NENG.....JDSU....AMCC.....CIEN...
ARBA!
Fletch
The best over the last 5 days,
Fletch
At least in what I hold.......but....not in QLGC yet..........
Why is GLW doing so good............
buy NY.....hold China,
Fletch
Corning Holds Grand Opening Ceremony at Taichung LCD Glass Substrate Facility; Company's Second LCD Glass Substrate Plant in Taiwan to Add Significantly to Large-Sized LCD Substrates Supply
TUESDAY, JANUARY 10, 2006 8:30 PM
- BusinessWire
TAICHUNG, Taiwan, Jan 10, 2006 (BUSINESS WIRE) -- Corning Incorporated (GLW) today hosted its grand opening ceremony of the company's LCD glass substrate facility at the Central Taiwan Science Park in Taichung, Taiwan. Corning has built a strong foundation in Taiwan by providing the Taiwan market with advanced technologies and innovative products, building a close relationship with Taiwan customers, and contributing to Taiwan's economy.
"The shared commitment between Corning, our customers and the Taiwan government has produced a triangle of success, leading Corning to further invest in technology and capacity to better serve Taiwan's dynamic LCD panel industry," James P. Clappin, president, Corning Display Technologies, said during his address to the many officials, customers and employees gathered for the grand opening celebration.
The official opening of the Taichung facility is a key milestone for Corning in several ways. This facility represents Corning's largest capital investment announced for a single manufacturing facility worldwide at approximately US$ 1.5 billion. Moreover, when complete, this facility will be among the largest LCD glass substrate manufacturing facilities in the world and is designed for further expansion as needed to maintain pace with the growth of Corning's customers.
Eugene A. Verdon Jr., president, Corning Display Technologies Taiwan, expressed his appreciation to government officials, employees and customers who helped make this event possible, "The end result of all your incredible efforts is that we're standing in what will be one of the largest LCD glass facilities in Taiwan or around the globe. Not only do we expect Taiwan's market to grow, but we also anticipate that the innovations and technological advances made in Taiwan will shape the global LCD industry."
"Additionally," Verdon continued, "A team of talented, bright individuals will be vital to the success of our business and that of the TFT-LCD industry in Taiwan." As a result of the development of the Tainan and Taichung facilities, Corning plans to hire and train hundreds of engineers, skilled technical workers and commercial staff for both facilities. For more information on career opportunities with Corning, please visit Corning Taiwan's web site: http://www.corning.com/tw/tc/careers/.
About Corning Incorporated
Corning Incorporated (www.corning.com) is a diversified technology company that concentrates its efforts on high-impact growth opportunities. Corning combines its expertise in specialty glass, ceramic materials, polymers and the manipulation of the properties of light, with strong process and manufacturing capabilities to develop, engineer and commercialize significant innovative products for the telecommunications, flat panel display, environmental, semiconductor, and life sciences industries.
Forward-Looking and Cautionary Statements
This press release contains forward-looking statements that involve a variety of business risks and other uncertainties that could cause actual results to differ materially. These risks and uncertainties include the possibility of changes or fluctuations in global economic and political conditions; tariffs, import duties and currency fluctuations; product demand and industry capacity; competitive products and pricing; manufacturing efficiencies; cost reductions; availability and costs of critical components and materials; new product development and commercialization; order activity and demand from major customers; capital spending by larger customers in the liquid crystal display industry and other businesses; changes in the mix of sales between premium and non-premium products; facility expansions and new plant start-up costs; possible disruption in commercial activities due to terrorist activity, armed conflict, political instability or major health concerns; ability to obtain financing and capital on commercially reasonable terms; adequacy and availability of insurance; capital resource and cash flow activities; capital spending; equity company activities; interest costs; acquisition and divestiture activities; the level of excess or obsolete inventory; the rate of technology change; the ability to enforce patents; product and components performance issues; changes in key personnel; stock price fluctuations; and adverse litigation or regulatory developments. These and other risk factors are identified in Corning's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the day that they are made, and Corning undertakes no obligation to update them in light of new information or future events.
SOURCE: Corning Incorporated
Corning Incorporated
Media Relations:
James E. Terry, 607-974-7343
terryje@corning.com
M. Elizabeth Dann, 607-974-4989
dannme@corning.com
or
Investor Relations:
Kenneth C. Sofio, 607-974-7705
sofiokc@corning.com
I'm not into watching wedges.........Mostly......
I just buy them,
Fletch
If I have some $.......that is....&.....always have some gold.......Why did I sell some?? Dah..i dunno!
Hey.......KUB is wedging,
Fletch
Do you mean like SNE......TM.......HMC......?
I'm in,
Fletch
Good ones to be in over the last 3 months,
Fletch
Hey lpdcb,
It looks "real" to me,
Fletch
"we are on our way into a parabolic move."
Sounds good to me............I'm now pondering.......
How long can the shorts keep covering...............
This is too cool,
Fletch
BTW....wife wanted me to buy Sony for her Roth for this year........
I looked in our accounts and it was in HERS already :>).........
Maybe I talk in my sleep......err maybe she's on IHUB......oh no!~
Hey buddy,
Yes........Look at the % of Float Held by Institutional & Mutual Fund Owners: 92%........
Then you just need for THEM to keep....
liking it,
Fletch
http://finance.yahoo.com/q/mh?s=MDRX
Thanks Keller
APPL.....a core......................but especially ADAT....... JDSU......FNSR.........JNPR......NENG even....very nice........
If it could go on and on,
Fletch
Yep......still in SBUX ......I bought a little NOV today.......not much.......just new Roth IRA $....
looking at those under 10 charts and drooling,
Fletch
New Vettes......very cool.....
Hey buddy,
In comparison to China........India......Africa......South America ect............we've all been on the gravy train here in the great USA......not just the unions.......how about upper managements pay?........CEO's n such........are they worth it?
I see the exuberance when visiting the 1000 Islands....the huge yachts..... take the cigarette boat to lunch.......or some NYC, Miami, Orlando areas for that matter.....
Some more under 10 to look at,
Fletch
Yea......the big thing is I don't know if these moves are our genius ......or just the January effect......
Lets see if they are still up in the summer thru October........
Are we traveling on some good looking old pattern?
Fletch
Some under 10 to think on...........they all have fundies......
Hey wahz,
Yes........the chart says you did well on GM......
I hope it goes to 50..............
For all our sakes,
Fletch
Hey south louisiana,
It's almost like throwing darts now........
buy the dips,
Fletch
Yes VRSN ok.........look further below.........
Some funds........not as big in gains.......but never big losers,
Fletch
Some good ones,
Fletch
Lots going up........some way up......Bull markets are very very cool!
May our ports runneth over,
Fletch
I recently added to VRSN.....TKLC....most charts just getting better!!
What a cup.......+..Yes...Alexander alerted me to an old buddy BEAS...thanks Alexander.....YHOO!
Hey ranch hand,
Looks good around here.........might go lower to test 20 but in this area....
I might add some,
Fletch
I should post this breakout,
Fletch
What a candle! It took out 10..............nice!
Hey Mike,
gottfried said it right......plus I can't guaranty anything!! .... BTW.....this is a good time to bring up board hype....
I'm guilty of it.....I like a play ......I did my DD.....but the jerks at the company can just lie or screw up big time......how can I know?? .........How can anyone but the jerks themselves?
Why I try and post mostly charts...... and not offer opinions....
No crystal ball,
Fletch
BTW....I was way too bullish thinking we'd hit 2506 last year....or 2503?
Lets hear it from the accurate ones?? What we do in 2006? Inquiring minds want to know LOL.........
I just scored 50-60 plays on Morningstar........known for fundies with no TA....why I try and use both........
http://tinyurl.com/8cdfj
In the highest first order the top 10 are.....
MXIM, LLTC, TKLC, INTC, EBAY, SYMC, ALTR, QCOM, JNPR, KLAC...
I've already added to JNPR,
Fletch
Double bottom....ready for take off.............BJMHO....?:>?