SAN FRANCISCO: Google Inc missed Wall Street’s quarterly profit estimates for the first time in two years after a spike in expenses offset a 24% revenue jump, but it vowed to keep investing in new businesses to drive long-term growth.
Shares of the Internet search engine leader fell almost 4% on worries about rising costs as it spent heavily on research and development (R&D) and hired aggressively to expand into new products and markets in hopes of maintaining the growth momentum Wall Street looks for.
Google eased worries that lingering economic uncertainty from the European debt crisis could take a toll on its business, and stressed that it planned to continue to aggressively invest in new growth opportunities.
A file picture shows a Google worker riding past the company’s headquarters in Mountain View, California. — AP
“They’re throwing more money into R&D than people were expecting and a little bit less into sales and marketing,” said BGC Partners analyst Colin Gillis.
“Google has been pretty clear that it’s going back into investment mode. They added 1,200 people in the quarter, which means more expenses are going to kick in in September.”
Google said the spending was concentrated on a handful of initiatives it believed could grow into billion-dollar businesses, providing diversification from the search advertising that now accounted for the lion’s share of revenue.
Finance chief Patrick Pichette cited Internet display advertising and the nascent smartphone advertising market as some of the key areas for investment, and defended the spending amid the economic uncertainty. “It’s while everybody is cautious that you need to pounce,” Pichette said in an interview with Reuters on Thursday.
Pichette added that Google, which generated 52% of its second-quarter revenue outside the United States, had not suffered any ill effects amid investors fear that an economic slowdown could crimp advertising spending.
Thursday’s results were a rare outright earnings miss – Google’s first since the second quarter of 2008. The company posted net income of US$1.84bil, or $5.71 a share, in the second quarter – up from US$1.48bil, or US$4.66 a share, in the year-earlier period.
Excluding items, Google’s EPS was US$6.45, below the average estimate of US$6.52, according to Thomson Reuters. Net revenue, which excludes costs that Google shares with website partners, was US$5.09bil, above the US$4.98bil expected by analysts polled by Thomson Reuters. — Reuters
Whether you are Neil Morrissey or Jo Bloggs, if you have been declared bankrupt or have an IVA, your name, address and birthdate will become public knowledge
If you're bankrupt and the bailiff is after you, the neighbours just need log on to find your personal details. Photograph: Andy Hall for the Guardian
You suspect one of your neighbours has fallen on hard times. The expensive car that once stood in his drive has disappeared, and he may even have gone bankrupt – but can you be sure?
Or perhaps you are thinking of hiring a local builder. He comes well-recommended, but you heard a rumour that he has got into financial difficulties.
Or maybe you're in the process of renting out a property, and want to be completely sure that the tenant you have provisionally chosen doesn't have any financial skeletons hiding in his closet.
There is an official website that may provide an answer to all three scenarios – and many others - but most people probably don't know it exists.
The free-to-use individual insolvency register (insolvency.gov.uk/eiir/) allows anyone to check, quickly and easily, if someone is bankrupt or has taken out an "individual voluntary arrangement" (IVA) – a less drastic alternative to bankruptcy that allows a struggling borrower to restructure their debts.
The website is run by the Insolvency Service, which is required by law to maintain a public register of bankruptcy and related information. A spokesman says the website allows anyone to check the status of someone they might be thinking of doing business with, or are planning to offer credit to. Naturally, the website is manna from heaven for nosy neighbours and curtain twitchers.
All you need to search the database is someone's surname, or even part of their surname. The search can cover the whole of England and Wales, or the area covered by a particular Insolvency Service office.
Once you have keyed in the details, the site immediately throws up a list of people with that name. If it's a more common name, it will be several pages long. As well as their full name, you are provided with their full address, date of birth, the category of case (eg bankruptcy, IVA or debt relief order) and, if relevant, the court dealing with their case.
"We are a country of busybodies, and we like to check up on who we think might be bankrupt," says Mark Sands, national head of bankruptcy at business advisers RSM Tenon.
RSM Tenon has analysed the register's data and found that when it comes to who is going bankrupt, the fastest-growing age groups are the youngest (the under-25s) and the oldest (the over-65s). Equally intriguingly, in 2009, the most common first name for a man going bust was David, and for a woman it was Susan.
Arguably, one of the reasons why it is important to have an easily accessible online register is that, as part of recent changes to the law, details of people who are declared bankrupt are no longer automatically advertised in the local newspaper. Experts say that in most cases, these details will now not appear in the local press unless there are particular circumstances.
The famous don't receive any special protection. A search of the register shows that Neil Morrissey of Men Behaving Badly fame entered into an IVA in September 4, 2009, while EastEnders and I'm a Celebrity star Joe Swash is listed as bankrupt since October 20, 2009. In each case, the entry lists their date of birth and home address.
In reports last September, Neil Morrissey said that he went into debt after a property company he invested in collapsed owing millions, while Swash told the Daily Mail his bankruptcy was a mix-up over a tax bill.
What goes on the online register?
It contains details of bankruptcies that are either current or have ended in the past three months; current individual voluntary arrangements and "fast track" voluntary arrangements; debt relief orders; and current bankruptcy restrictions orders and undertakings. It doesn't include details of disqualified directors, company insolvencies, or insolvencies in Scotland or Northern Ireland.
How much does it cost to search the register? Nothing – it's free to use.
How long do people's details remain there? In the case of bankruptcy, for three months after the date of the individual's discharge from bankruptcy. They are removed earlier if the bankruptcy is annulled. IVAs remain "until completion, revocation or the failure of the arrangement".
Why are my personal details being made available – that's an invasion of my privacy? The Insolvency Service says that, by law, it has to keep a public register of such information. It adds that this is used for purposes such as debt recovery, screening for employment and checking people's creditworthiness.
But why should my full home address be shown? "The personal details regarding date of birth and address are there so inquirers can be more certain that the information they seek relates to the correct person," says the Insolvency Service. It adds that this is especially important if someone is looking for an individual with a common surname, such as Smith or Jones.
There are instances where someone's address might be withheld – for example, if they have a violent ex-partner. But they would have to seek permission from the courts for their address details to be kept off the register.
Where can I get details of bankruptcies in Scotland and Northern Ireland? In the case of Scotland, contact: The Accountant in Bankruptcy, George House, 126 George Street, Edinburgh EH2 4HH. Tel: 0131 473 4600.
For Northern Ireland, contact: The Insolvency Service, Fermanagh House, Ormeau Avenue, Belfast BT2 8HY. Tel: 02890 251441.
China just kicked the U.S. in the proverbial nuts. I hate to say it but we had it coming.
Last month China played the U.S. into leaving it off its list of “currency manipulators.” To show just how grateful they were, yesterday China unveiled its first report on the debt risks of 50 countries. And guess who was ranked below China?
The U.S. of A.! In fact our government debt was knocked down from the best in the world to a pitiful 13th place.
Was it self-serving? No doubt about it. But it’s the truth. The only thing that’s surprising is that it took this long.
I saw this day coming. I’ve already talked a great deal about the U.S.’s runaway debt with you. Many will say it’s not a problem now. It’s in the future. To them I say the future is now.
The report was a warning to all investors: THE U.S. government debt market is NOT the safe haven you think it is. The Dagong Credit Rating Company, a professional rating agency in China, says US debt is more risky than Singapore’s, New Zealand’s and Norway’s.
But this is China talking...you know, the county that executes a couple of dishonest businessmen a year in the futile effort to tamp down corruption and bribe-taking.
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Can you believe a Chinese credit rating agency?
Or would you rather rely on Moody's, Fitch and S&P? These are the same head-in-the sand agencies that slapped triple-A ratings on subprime mortgage loans. They continue to rate US government debt AAA. Despite the deplorable state of our fiscal situation.
Me? I'm on board with Dagong. And I’m not the only one. In a recent survey of 440 executives from around the world commissioned by Royal Bank of Canada's capital markets unit.... 40% said they expect debt issued from companies will be considered safer than government debt.
Corporates safer than governments? I never thought I’d write those words. But think about it. Would you rather lend your money to a bankrupt organization (the US government) or a company with a strong balance sheet (like J&J for example)? I know where I’d rather invest. You need to take a look at corporate bonds. More on that later.
Meantime, Dagong was founded 16 years ago to rate Chinese corporate debt. It is privately owned. But Dagong made its announcement on Sunday at the headquarters of the Xinhua News Agency. This is the ruling Communist Party's main propaganda outlet.
Make no mistake. The downgrade of US government debt was made with tacit approval from the Chinese government. Consider it an admonition from our biggest creditor to get our fiscal house in order. Will we? Not with the pandering politicians we currently have in Washington DC.
One nation under debt
China’s concerns are legitimate. Consider…
Our national debt currently stands at $14 trillion. But $14 trillion is just for starters. According to the Federal Reserve we have another $2.5 trillion in state and local debt. Mostly municipal bonds. And according to Institutional Investor magazine nearly every state's pension fund is on the verge of running out of money. A federal bailout is all but inevitable. So tack on another $3 trillion.
But things really get ugly when you add in the government's obligations under Social Security and Medicare. The government doesn’t even take these obligations into account. They should. Right now those entitlement programs consume around 14% of tax revenues.
In just 10 years these programs will consume almost 1/3 of revenues. And if things don't change by 2030 it will be close to half. To meet these obligations the US government would have to have $106 trillion on hand right now. How much do we have? Not a penny.
So add on another $106 trillion unfunded liability. So while everyone thinks about our debt as $14 trillion. The real number is more like nine times that amount.
Consider the words of the former Fed Chairman Alan Greenspan in a recent essay “The federal government is saddled with commitments for the next three decades it will be unable to meet.”
China gets it. Greenspan gets it. 40% of executives around the world get it.
So it’s come down to this. Lined up on one side are global executives and China deeply worried about the debt hole we’re digging. On the other side is the US government (with its deeply indebted European fellow-travelers) still believing that government spending is a good thing.
And don’t expect this credit downgrade to change the government’s tune. They’ll call the Dagong downgrade politically motivated. They’ll continue to insist the only way out of this hole is to dig it deeper…more stimulus.
But the handwriting is on the wall. Interest rates will move up. Maybe not tomorrow or next month. But the stage has been set. Inflation will be making a big comeback.
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What to do now
Can you take advantage of the growing confidence in corporate versus government debt? Sure. Add corporates to your portfolio. Stick to short maturities and don’t consider anything less than investment grade. If you’d like help selecting the right bonds I highly recommend Steve McDonalds Bond Trader service.
Finding the best corporate bonds is what Steve does best. He already has an impressive winning percentage of over 97%. Click here to find out how Steve can get you off the stock market rollercoaster and into the new “safe haven” of corporate bonds.
A file picture shows a Google worker riding past the company’s headquarters in Mountain View, California. — AP 
