Google Earnings Conference Call Play by Play

CONTRIBUTOR Thomas J. Catino http://www.antandsons.com

Google Inc. (Nasdaq: GOOG) reported earnings per share in the third quarter of $2.62 and revenue of $1.87 billion compared to analyst estimates of $2.42 in profit per share on revenue of $1.81 billion. The following is a play by play of the Google earnings conference call that took place after the close of yesterday's trading session. Join us live for the next earnings conference call by logging on to our blog.

4:43 PM: Conference call begins.

4:47 PM: CEO Eric Schmidt briefly overviews the partnerships and acquisitions that highlighted the third quarter.

4:50 PM: Revenue and expense numbers being dished out. This is mostly a summation of the earnings press release issued by Google after the close.

4:52 PM: Sergey Brin comments on the infrastructure work and new features that have improved search coverage.

4:54 PM: Brin believes video is a great online medium to provide more content to search queries through both Google Video and YouTube.

4:57 PM: Larry Page says the company's strength lies in its advertising base, especially after teaming up with companies such as Intuit and ValPak.

4:57 PM: Google now working on mobile, local and video ads.

4:57 PM: Schmidt says Google is working to make ads and searches more personalized and targeted.

5:00 PM: Citigroup analyst asks if product strategy will be re-aligned and asks about Google's cash position and its use in acquisitions.

5:02 PM: Google to focus on other ad/search mediums. Will use cash, not stock in future deals.

5:05 PM: Bear Stearns analyst asks about recent acquisitions. Google responds by alluding to developing other sources of revenue, besides advertising, such as enterprising, Google Apps, which could be a potential major source of revenue and Google Product.

5:07 PM: Merrill analyst asks about YouTube and when video will be able to be better monetized.

5:08 PM: Google believes advertisers are finding video ads a nice complement to other mediums. Traffic acquisition costs moving in the "right" direction.

5:12 PM: Goldman analyst asks why revenue per search differs between U.S. and International market. What search queries would be appropriate for video? What percent of revenue expected from video?

5:13 PM: Video could get to 10%, but Google needs to figure out the methods of implementation. International markets very strong, especially in U.K., Germany and Italy.

5:15 PM: Google shares now trading over $458 compared to its closing price of $426.

5:16 PM: Google very optimistic about Western Europe and growth rates in emerging markets that are ahead of U.S. and Europe.

5:18 PM: Analyst at Thomas Weisel asks about potential copyright violations with YouTube and its profitability.

5:19 PM: Google not concerned with the interpretation of the copyright law and its effects on Youtube. Declines to give guidance on YouTube, as is their policy generally.

5:20 PM: RBC Capital Markets analyst asks about capital expenditure spending.

5:22 PM: Google AdWords advertisers program take rates are strong. Thriving Google.com business.

5:24 PM: CapEx growing faster than revenue this year, but it is necessary to add value.

5:25 PM: Google discusses its revenue drivers this quarter; seasonally traffic less robust, but monetization improved in Q2, thus RPM was impacted and was strong to begin Q3. Strong traffic from Google sub-domains contributing to growth in Google.com revenues.

5:27 PM: In response to an analyst question, Google talks about growth beyond search clicks coming from product improvements and product innovation as well as geographic expansion of products and users around the globe. Has had a "cascading effect." Improvement in ad targeting and search quality has also helped.

5:30 PM: Analyst asks if growth to monetization cannot keep up, will company growth slow? Google responds by saying new formats, venues keep popping up because of new technology and Google will be able to successfully monetize these new spaces.

5:35 PM: Analyst asks if distribution deals contributed to Google.com revenue? Google says that distribution increases coverage, revenue but these partnerships are a way of doing business in the future. Google hints at more deals in the future after YouTube is integrated.

5:36 PM: Conference call ends.

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