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4/19/2007
  Google's Q1 2007 Earnings
Well, Google is so dominant that it's kind of boring. They had a basic blow-out quarter, while Yahoo is the sick man of the internet...

In fact, the earnings call WAS pretty boring, with the Google team practicing serious message discipline, everyone emphasizing that they really DO CARE about search and especially advertisers.

Gross revenue increased 63% over Q1 of last year to $3.7 billion. Revenue from Google properties was $2.3 billion, representing strong year-over-year growth of 76%. We experienced healthy traffic growth in our Google.com business both domestically and internationally.

Now turning to cash flow, operating cash flow was strong at just over $1.2 billion. Free cash flow, a non-GAAP measure which we define as cash flow from operations less CapEx, increased to $623 million.

In the tradition of Arsenio Hall, here are some thoughts - things that make you go "Hmmmm".

Overall, three things really strike me: 1) Google is making a lot of these gains with big advertisers. 2) Unlike Terry Semel, who says that Yahoo is "well-positioned to take advantage of future internet growth", Google is actually taking advantage of current internet growth in a massive way. 3) Google looks insanely strong internationally. By comparison, Yahoo's over-hyped Panama ad system is NOT live in any countries besides the US and Canada.

Even though every analyst currently has "buy" ratings on Google, which doesn't leave a lot of room for upside surprises, Google's financial performance and increasing dominance should be able to power the stock through the $500 - $600 level.

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