Friday, February 02, 2007
The Not Making It Up Awards, Part II
—Eric Schmidt, Google CEO, earnings call
Earnings season is winding down, and even Google has proved itself mortal—or at least subject to the same law of large numbers that causes all things, eventually, to regress to the mean.
The Mountain View boys' U.S. revenue growth rose 53%, a number Microsoft would kill for but which is nothing like the 80% growth in 2005. In fact, Google’s U.S. revenue accelerated during the first three quarters of 2005, but has decelerated every 90 days since.
It was up to non-U.S. countries to carry the ball, which they did with 90%-type growth, but the rising cost of doing business online and Google’s own spend-for-growth mentality—which has paid off in spades since the IPO—caused a slight but notable company-wide margin contraction.
Overall, Wall Street’s Finest “reiterated” their positive ratings on Google, which in these post-Enron days of extreme skittishness may take the form of “Buy” or “Outperform” or “Overweight” or “Legally We Do Not Want to Be Held Liable if You Lose Money But We Do Believe the Stock May Be Appropriate For Certain Accounts Assuming You Are Not a Moron But Before You Invest Please See the Attached Sixteen Pages of Legal Disclaimers.”
Google’s conference call did not, alas, generate the kind of fawning from Wall Street’s Finest that makes for good copy here, although CEO Eric Schmidt did do his usual impersonation of a kindergarten teacher at Parent’s Night, both congratulating his class on their work and expressing his great satisfaction to his listening audience, repeatedly, to the point where you want to either break something or vomit, or both.
In fact, Schmidt gets our first award of this second installment of The Not Making It Up Awards:
The Most Use of “Very” as an Adverb in One Sentence Award
Eric Schmidt, Google Inc. - CEO
Thanks very much, Kim. Business continues to be very, very good here at Google, and we are very happy to present another very strong performance from the Company.
And that was just the first sentence. In fact, he used it 11 times in his opening remarks and 43 times during the entire call.
I am not making that up.
Here are the other awards we deem worthy of either Wall Street’s Finest or the Captains of American Industry, in no particular order:
The Why They Call Us a Cyclical Award
Bill Foote, USG Corporation - Chairman, CEO
Each downturn is unique, and a distinctive feature of the downturn that began in 2006 has been the speed with which adjustments have been made by both homebuilders and drywall dealers to keep inventories under control. For us, that has meant a rapid contraction in wallboard demand.Let me illustrate. Industry wallboard shipments were up 6% in the first six months of 2006 year-to-year. They were down 17% in the last six months year-to-year. Up 6 in the front, first half; down 17 in the second half.
The Worst Reason for Not Answering A Simple Question Award
Antonio Perez, Eastman Kodak Company - Chairman, CEO
Analyst: And would it be possible to give us some sense of what you think investable cash flow or what you now call net cash generation will be in '07?
Perez: For the year -- on the 8th, again, we'll talk to that. We won't have the time -- if I give you a number now, I won't have the time to explain why we reached that number. The -- and why we have the -- the two, three hour meeting on the 8th. We'll do a much better job at that time.
Analyst: Okay. Okay, I tried. Thank you.
The Bob Nardelli Lives! Award
Mark Ketchum, Newell Rubbermaid Inc. - President, CEO
In 2006, we also announced the building of a new headquarters building in Atlanta, which will bring together several of our business units and functions, further supporting our cultural transformation. At the new Newell Rubbermaid, we want to foster a Company culture that embraces consumer centric innovation and branding, collaboration and team work, training and development, diversity in all its forms, and best-in-class performance.
The More “Cute Stories About Inflation” Award
Mike Mangan, Black & Decker Corporation – CFO
During the fourth quarter, we had about $39 million in incremental commodity inflation. So for the year, that resulted in 2006 with a number of $95 million. As we look to 2007, we are expecting about $120 million of incremental inflation, weighted a little more towards the first half.
The Eddie Haskell Lives! Analyst Award
Eric Katzman, Deutsche Bank - Analyst
Katzman: Good morning, everybody.
David Mackay, Kellogg Co. - President, CEO Good morning.
Eric Katzman: Congratulations on your new titles.
David Mackay: Thank you.
The Most Bizarre Impersonation of a Low-Cost Airline Award
David Neeleman, JetBlue Airways - CEO
First of all…our primary goal is to institutionalize low cost carrier spending habits. We are really, really focused on not only keeping low cost but even driving our cost even lower through improved productivity and through automation. And we think that we have some room to go on our cost initiatives, and John'll -- like I said, will give you a lot more detail on that.
The Most Refreshingly Candid CEO Award
Reuben Mark, Colgate-Palmolive - Chairman, CEO
Let me back up for a moment. Well, we'll wait until the next question. I assume somebody else will ask about margin because I have some interesting things, I think, to say about gross profit.
Why did I screw that up? Who knows? Okay. Anyway, sorry. Go on.
To be continued. Nominations from the floor are welcomed.
I Am Not Making This Up
© 2007 Jeff Matthews
The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.
Posted by Jeff Matthews at 8:49 AM