Let's put aside Google Base, GBuy and GMail fixes for the moment to focus on Google's need to improve its financial transparency. Since it went public in August 2004, Google has frustrated analysts with its refusal to provide guidance, which only adds to the volatility of its shares. Sergey Brin and Larry Page have adopted a "trust us" approach while Wall St. wants more "show us". This week, however, Google may have started to grow up financially after its stock was beaten up after CFO George Reyes said "clearly, our growth rates are slowing" during a Merrill Lynch webcast. Whether or not his comments were misinterpreted, Google was forced to scramble as CEO Eric Schmidt during a four-hour meeting with analysts yesterday bubbled about how Google was aiming to be a US$100-billion company, and plans to achieve this goal were underway. Hopefully, Google has learned it needs to take an entirely new approach to explaining how it's growing, where it's growing and its strategic vision so investors can get a better handle on the company's prospects. It's one thing for Sergey and Larry to have a hidden game plan of 100 or 1,0000 strategic goals, it's quite another to avoid transparency in the name of strategic secrecy or strict adherence to Sarbannes-Oxley. Another intriguing financial issue for Google is the need to diversify revenue sources. As Australia's Herald Sun accurately puts it: "Forget fancy innovations such as Google Earth or the recently announced blogging software. About 97 per cent of the company's revenues come from the four-line text ads that appear with Google search results". The biggest question is how much more gas  this lucrative vehicle has left in the tank? Obviously, Google's launch of new (albeit less than inspiring) services creates more AdSense real estate. But the company needs other tools to generate enough growth to fuel significant revenue increases and engage investors. Whether it's e-commerce (Google Base, Google Video), pay-per-call, radio advertising (dMarch Broadcasting) or a move into print advertising, the Google's advertising empire needs to expand beyond AdSense. Maybe my description of Google as a one-trick pony is simplistic but the facts are the facts. Reyes' comments suggest the company may be starting to grapple internally about where future growth will be generated. Or maybe Schmidt's comments indicate that all is well. Whatever the corporate message - and it appears to be a little confused - Google needs to be a little more clean on its strategic vision and financial outlook/results.
For more, check out John Battelle offers us a cross-section of comments from analysts and coverage from CNet, and Inside Google. Meanwhile, Mike Langberg takes umbrage with a quasi-sarcastic/patronizing remark made by Eric Schmidt.
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