Google’s 2006 Money Shot, $10 billion in revenues

If you are a baseball fan, then you have seen Gary Sheffield swing the bat, you get a feeling that if the bat connects with the ball, then the leather is in for some serious hiding. The non scientific description of such an act is called ‘hitting the covers” off the ball. Well, that’s exactly how one feels about Google’s fiscal performance for the fourth quarter 2006 and for fiscal 2006.

Google just reported¹ its fourth quarter 2006 sales of $3.2 billion, and net income of $1.03 billion. The sales for fiscal 2006 are $10.6 billion, and profits for the year came in just over $3 billion. By itself, these numbers don’t mean anything. However, if you put them in context of what Wall Street was expecting, then you understand why Google just took a Sheffield type swing.

For starters, the most optimistic estimate for the 2006 revenues was $7.3 billion, and they just blew past that number. They were supposed to do $10 billion-plus in sales in 2007. Google is in a bit of a hurry. For the fourth quarter 2006, the high end revenue expectation were $2.31 billion. This is a moon shot.

Interesting tidbit from the earnings release:

Other cost of revenues, which is comprised primarily of data center operational expenses, as well as credit card processing charges, increased to $307 million, or 10% of revenues, in the fourth quarter of 2006, compared to $223 million, or 8% of revenues, in the third quarter.