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Google Earnings Boost From Foreign Markets and Falling US Dollar

Companies / Google Apr 18, 2008 - 12:15 AM GMT

By: Nadeem_Walayat

Companies Google Earnings Boost From Foreign Markets and Falling US Dollar
Google surprised a market that was getting used to earnings disappointments by beating expectations for the first quarter in posting earnings of $1.31 billion / $4.12 per share, against $1 billion ($3.18) up 31% from a year earlier. Google's clicks based adsense advertising model continues to prove profitable as Google expands into strong overseas markets, which now account for 50% of Google's revenues and therefore providing google a revenue and profits boost due to the falling Dollar that has tumbled as much as 15% against many currencies including the Euro in less than a year.


Google's shares soared by more than 10% on the earnings news to above $500, which continued in after hours trading to as high as $525. Google had fallen from a December all time high of $724 on concerns that advertising revenues would be hit in the face of a US recession, which had seen Google trade down to $412. Thursdays breakout to the upside is clearly extremely bullish for the long-term. Short sellers of Google's stock prior to the announcement on expectations of earnings disappointment will have experienced a short squeeze and thus contributed to the extraordinary rise in Google's share price.

The earnings surge suggests that despite the US economic slowdown, Google is well placed to benefit from the take up of internet advertising and access amongst the overseas markets, google is winning market share not just in emerging markets but also in developed markets an example of which is that Google now derives 15% of its revenues from the UK. This strong oversea's growth makes Google one of a few ideal US stocks to weather a US recession. Google's after hours trading is expected to lift technology stocks on Friday's open.

By Nadeem Walayat

Copyright © 2005-08 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 120 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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