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Contributors: Douglas McIntyre Jon C. Ogg

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Thursday, July 20, 2006

Google Missed the After-Hours Carnage

GAAP EPS was $2.33 on 310 million diluted shares outstanding and Non-GAAP EPS was $2.49.
Net revenues were $2.46 billion for the quarter ended June 30, 2006 and ex-TAC revenues were $1.635 Billion. But TAC (Traffic Acquisition Costs), the portion of revenues shared with Google's partners, increased to $785 million in the second quarter. TAC as a percentage of advertising revenues remained flat at 32%.

What was expected: $2.23 per share, but this differs widely and some are close to $2.40 per share. Revenue expectations are about $1.65 Billion, and that range is fairly tight with most being under $1.71 Billion.

Implications: The company has been whipping around from positive to negative. It is actually up $4.38 from the close at $391.50, so we'll have to see how they treat it tomorrow. This has been trading all over the place. The TAC is running high for them and is somewhat similar to YHOO, except it was a flattish percentage to last quarter.

Jon C. Ogg
July 20, 2006

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