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Google Has The Cash

By: David Utter

The joyride continues for the search advertising company, as it reported a 77 percent increase in revenue for the year-over-year second quarter of 2006.

Google Has The CashGross revenue for the period totaled $2.46 billion. Deducting traffic acquisition costs (TAC) of $785 million, revenue was $1.675 billion in the second quarter.

The TAC percentage of 32 percent for the second quarter stayed the same as the first quarter 2006. These are the portion of revenues Google (GOOG) shares with its partners. Partner sites brought in gross revenue of $997 million for the period, compared to $630 million in Q2 '05, and $928 million in Q1 '06.

Fifty-eight percent of gross revenue came from Google-owned sites, totaling $1.43 billion. International revenues brought in the other 42 percent. Google also reported GAAP net income of $721 million, for earnings per share of $2.33.

The company has amassed a sizable cash pile, thanks in part to the public stock offering that took place in April 2006 that brought in $2.06 billion. After taking into account the $1 billion cash investment Google made in AOL, Google has cash, cash equivalents, and marketable securities of $9.82 billion.

Google has been mostly vague on its intentions for its growing bank account. The company is expanding it facilities as it builds a new complex on NASA grounds at Moffett Field. They have also shown an interest in occasionally acquiring companies with interesting technology, like 3D design software company SketchUp.

New services launched by Google, especially its free service, demand more from Google's infrastructure: more CPU, more storage, more networking, more bandwidth. All of that costs money, and Google appears to be prudently planning for that as much as anything else.


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