Must-know overview: An investor’s essential guide to Google

Market Realist

Must-know: An investor's essential guide to Google (Part 1 of 6)


Google is based in Mountainview, California. The company specializes in Internet-related services and products. Google’s business primarily focuses on search, advertising, operating systems and platforms, enterprise, and hardware products. Its mission is to organize the world’s information and make it universally accessible and useful.

Larry Page once described the “perfect search engine” as something that “understands exactly what you mean and gives you back exactly what you want.” Since he spoke those words, Google has grown to offer products beyond just a web search. But the spirit of what Page said remains. With all the company’s technologies—from search to Chrome to Gmail—Google’s goal is to make it as easy as possible to find the information you need and get things done. Google’s YouTube also boasts over a billion unique visitors per month and growth of over 50% in 2013.

In the Internet giant’s latest fiscal quarter results, net income, EPS, and revenue increased even as ad rates declined 11%. Revenues jumped 17% year-over-year, to $16.86 billion, beating analysts’ expectations. But earnings per share rose to $9.90, below estimates of $12.19. Google reported net income of $3.38 billion, compared to net in the same period last year of $2.89 billion. The company’s shares have been up more than 50% over the last year.

Google recently entered a definitive agreement to sell its Motorola Mobility smartphone business to Lenovo for approximately $2.91 billion. Google had acquired the handset maker for $12.5 billion in May 2012.

Google generates revenue primarily by delivering relevant, cost-effective online advertising. Its advertising programs, which range from simple text ads to rich media ads, help businesses find customers and help publishers make money off their content. The company provides a variety of tools to help businesses of all kinds succeed on and off the web. These programs not only form the backbone of Google’s own business but also enable entrepreneurs and publishers around the world to grow their businesses. Google also provides cloud computing tools for businesses.

A brief history

Founders Larry Page and Sergey Brin met at Stanford University in 1995. By 1996, they had built a search engine (initially called “BackRub”) that used links to determine the importance of individual webpages. Larry and Sergey named the search engine they built “Google,” a play on the word “googol,” the mathematical term for a 1 followed by 100 zeros. Google Inc. was born in 1998, when Sun co-founder Andy Bechtolsheim wrote a check for $100,000 to that entity—which until then didn’t exist. Google’s initial public offering took place on August 19, 2004. A total of 19,605,052 shares were offered at a price of $85 per share. The sale raised $1.67 billion and gave Google a market capitalization of more than $23 billion.

Continue to Part 2

Browse this series on Market Realist:

View Comments (0)