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December 18, 2006
Bearish on Google Interest Income
The WSJ has a piece (one badly missing a useful chart) today making the bearish case for Google earnings in 2007 based on the declining oomph being delivered by interest income as year-over-year comparables become tougher.Q4 '05: 7xThat historical spike goosed Google earnings growth overall from 63.8%, year-over-year, to 78.8%, but, so the argument goes, with the company's cash-delivering IPO receding into the past things get tougher going forward.
Q4 '06: 1.68x
Fair enough, but it's worth pointing out that rates are also higher than they were, which will help, and it isn't as if investors aren't expecting a size effect to kick in this year, with Google earnings decelerating something just becase of the law of large numbers.
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