Google Inc executives provided investment analysts with a bright outlook on Thursday in a display of confidence that appeared aimed at defusing growth concerns raised by the search engine leader's chief financial officer earlier this week.
In his opening remarks, Google CEO Eric Schmidt assured the roomful of analysts that he sees "tremendous headroom" to develop better advertising formulas, in turn generating more of the commissions that account for most of the company's profits.
Schmidt underscored his optimism at one point by saying Google someday might generate US$100 billion in annual revenue as it expands into a variety of new advertising channels, including television, radio and publishing. The 7-year-old company's revenue totaled US$6.1 billion last year.
PHOTO: AP
Jonathan Rosenberg, Google's senior vice president of product management, echoed Schmidt's remarks in an ensuing presentation. After noting that Google had already improved the relevance of its ads, Rosenberg emphasized there are "still many, many gains to be made there."
The upbeat presentations at Google's Mountain View, California, headquarters, contrasted with the cautious commentary of CFO George Reyes during a question-and-answer session at an investor conference on Tuesday in New York.
After describing an 18-month effort that had enabled Google to display more revenue-producing ads, Reyes said there was little room left for more technical improvements to spur the same pace of revenue growth.
Because of that, Reyes said the company's growth rate would likely taper off -- a prospect that set off alarms among investors and caused Google's stock price to drop precipitously.
Google's stock rebounded during Thursday's Webcast of management's remarks. The company's shares gained US$9.77, or 2.7 percent, to US$374.57 in afternoon trading on the NASDAQ Stock Market. Despite the rally, Google's stock remained about 4 percent below its value before Reyes raised the specter of slower growth.
As he tackled some of those issues, Schmidt identified Microsoft Corp as the rival that most worries Google because of the way the company has aggressively attacked other technology upstarts in the past. Microsoft currently runs the Internet's third most popular search engine, ranking behind both Google and Yahoo Inc, but it has vowed to close the gap by improving its technology and luring new users by giving away free merchandise and services.
Schmidt also said there's no sign that the prices to advertise on Google's network have peaked -- another factor that bodes well for the company's future profits.
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