Today, on Google’s quarterly call, Eric Schmidt, currently Google’s CEO, spoke first, stating the obvious, that Google had a strong year and their outlook is very bright. Google reported earnings of $8.44 billion for the 4th quarter, ending December 31st, 2010. This is an increase of 26% compared to the 4th quarter of 2009 revenues of $6.67 billion.
‘Our strong performance has been driven by a rapidly growing digital economy, continuous product innovation that benefits both users and advertisers, and by the extraordinary momentum of our newer businesses, such as display and mobile. These results give us the optimism and confidence to invest heavily in future growth — investments that will benefit our users, Google and the wider web.”-Eric Schmidt
“This is just the tip of the iceberg. Expect us to continue to develop further capabilities.” -Sergey Brin
Just moments ago, we reported that Google was doing a bit of re-organizing around the dinner table. Eric Schmidt announced that he is stepping aside as CEO and Larry Page will fill his shoes. Sergey Brin will be moving to the title of Co-Founder and Schmidt will step in as Executive Chairman. The changes will take effect on April 4, 2011.
In his new role Schmidt will focus on government outreach. When asked how he will deal with regulators, he answered, “The simple answer is that we’re talking to them. We need people to understand what we do and what we don’t do. Our core strategy is to be as transparent and collaborative as possible.”
In terms of Google’s money made from advertising, Google reports its revenues, consistent with GAAP (generally accepted accounting principles), on a gross basis without deducting traffic acquisition costs. In the fourth quarter of 2010, traffic acquisition costs totaled $2.07 billion, or 25% of advertising revenues.
When asked how the changes in Google smarter search results would drive ad revenues, Schmidt answered, “Our extraordinary results are coming from algorithmic improvements. Our basic strategy is to have the right ad in the right spot in the right time. This is the great magic of Google, if you will.”
Less than a week ago, we reported that Google is still the King of Search. While Facebook may have surpassed Google as the most visited site in 2010, Google Sites still led in search for the month of December and the end of Q4, grabbing up 66.6% of the search market share in the U.S..