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On the news Barron’s predicting a possible 50% drop in Google shares, here’s an interesting article in the WSJ that I don’t see many paying attention to online. The headline is as witty as it is accurate: New Key Word for Google: Interest.
“Fourth-quarter net interest income was $70.2 million, more than a ninefold increase from $7.4 million the year before. Figures in a recent report from research and data firm Thomson Financial suggest that gain may have accounted for more than one-fifth of Google’s overall earnings growth in the quarter.“
In other words, 20% of Google’s income was from interest on money in the bank. They have that money in the bank because they went public. Since they won’t have such a huge cash windfall again, they’re not likely to see such interest income again.
A coworker tells me Yahoo’s earnings were similar back in 2000, but I can’t find specifics right now. Anybody have any numbers on that? I know it’s not an apples t apples comparison, but I tihnk it’s interesting nonetheless.