The company showed a global reach early, adding numerous language versions around the world. In 2000, the company reached 18 million search queries per day and officially became the world's largest search engine ("Google, Inc." paras. 11-14).
The company now sought to address its need for income by introducing a keyword-targeted advertising program for another source of revenue. The company partnered with Yahoo! And with other partners, such as China's leading portal NetEast and NEC's BIGLOBE in Japan. Google introduced AdWords, a self-service advertising program that could be activated with a credit card. By December of 2000, Google received more than 60 million searches per day and reached the 100-million search mark per day in 2001 ("Google, Inc." paras. 15-16).
Google as a Public Company
Google would offer an IPO of stock beginning in 2004. McShane and Von Glinow cite Google as a successful company, especially in terms of navigating the perils of organizational development as it became a publicly traded stock. Google managed to gain a strong position in the stock market as well as in Internet commerce, and the company did so without altering its internal culture. From the first, the company developed its own style and maintained it even as it offered an IPO. This can be seen from when Eric Schmidt, CEO, made the following statement to investors when announcing the revenues for the first quarter as a publicly traded company:
would like to reiterate that we told potential investors from the start that Google is an unconventional company in many ways, and we made it explicitly clear that we expect to deliver the best results and strongest operational performance and the most consistent execution as we focus strictly on the long-term. We remain committed to these principles around running the business, and we believe that our future performance will continue to validate this approach over the long-term (Q3 2004 Google Earnings Conference Call).
This unconventional approach marked Google from the start, and while many on wall Street saw this as a drawback, investors seem to be in agreement with the idea that unconventional is what e-commerce needs to overcome the problems involved in achieving profits with such a new business plan.
The fortunes of the company's stock have been mixed, often with lower then expected earnings being announced as the company continues to expand and really to free its way into the developing Internet stock world. Many analysts early recommended not investing in Google, in part because of uncertainty about what an Internet stock would be worth. The company itself was open about its differences from the first, as in the following statement from its announcement to potential investors:
Google is not a conventional company. We do not intend to become one. Throughout Google's evolution as a privately held company, we have managed Google differently. We have also emphasized an atmosphere of creativity and challenge, which has helped us provide unbiased, accurate and free access to information for those who rely on us around the world ("Letter from the Founders" para. 1).
Management also noted the normal way analysts judged a stock on the basis of how well the company might meet its earnings projections but stated that Google would be more likely to take long-term opportunities that might sacrifice short-term results in order to assure the long-term strength of the company, a move analysts might not like. Other companies, they state, might accept "predictable earning rather than larger and less predictable returns" ("Letter from the Founders" para. 10). The company stated that it had adequate cash on hand to fund the business and that this would provide it "the flexibility to weather costs, benefit from opportunities and optimize our long-term earnings" ("Letter from the Founders" para. 11). The company also admitted,
Our long-term focus does have risks. Markets may have trouble evaluating long-term value, thus potentially reducing the value of our company. Our long-term focus may simply be the wrong business strategy. Competitors may be rewarded for short-term tactics and grow stronger as a result. As potential investors, you should consider the risks around our long-term focus. ("Letter from the Founders" para. 12)
This sort of openness fits quite well with the company culture and clearly appeals to many investors. It is also difficult to fault the company when it is this one about what is true of most companies, that future performance is not assured and that investors should keep this in mind when making decisions about the company.
Some of the recent analysis of the stock shows that Google is gaining ground with many analysts, as indicated ijn the following chart from Yahoo!:
UPGRADES & DOWNGRADES HISTORY
Research Firm
Action
1-Feb-08
Jefferies & Co
Downgrade
Buy
Hold
29-Jan-08
Canaccord Adams
Initiated
Buy
24-Jan-08
Stanford Research
Downgrade
Buy
Hold
22-Jun-07
Bernstein
Initiated
Outperform
28-Mar-07
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