The announcement that Google, the company that created the No. 1 Internet search engine, is about to go public has investors the world over in a lather. While the fever recalls the heady days of the Internet bubble, the clamor surrounding the offering speaks to a deeper hunger: a desire for markets to find their floors and to resume the growth of the 1990s.
Some of the enthusiasm is warranted. Google was founded six years ago by Mr. Sergey Brin and Mr. Lawrence Page, two Stanford University computer science graduate students. Since then, it has emerged as the leading Internet search resource, with 65 million users who request an estimated 250 million searches each day. Just as important, Internet advertising, the source of 95 percent of Google's revenue, is coming back. Internet advertising sales for the final quarter of 2003 set a new record of $2.2 billion. Overall, Net advertising reached $7.3 billion last year, a 21 percent improvement, but still below the record $8.08 billion spent in 2000. In other words, Google's business prospects look good.
The similarities to the go-go days end there. Unlike most of the Internet long-shots of the '90s, Google is already profitable. Last year, the company posted $962 million in sales and $106 million in profits. Closer scrutiny reveals that accounting measures actually decreased pretax cash profits from $570 million. In the March quarter, the company recorded 118 percent year-over-year growth and a small decline from the 124 percent year-over-year growth posted in the December quarter. Cash flow last year reached $218 million, an 85 percent over the previous year. Prospects look good: nearly one-third of Google's revenue comes from international business, almost twice what most analysts had anticipated.