Google 10-Q Filing: AOL Investment “Impaired,” And Other Tidbits

Gary Price alerted us yesterday to Google’s 10-Q filing. There’s lots of stuff in there worth drilling into. The headlines this morning, however, concern Google’s statement that it thinks it’s not going to get full value from its previous $1 billion, 5 percent AOL investment several years ago.

Here’s the statement in the filing:

We review our investment in AOL for impairment in accordance with FSP SFAS 115-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments (“FSP 115-1″). Based on our review, we believe our investment in AOL may be impaired. After consideration of the duration of the impairment, as well as the reasons for any decline in value and the potential recovery period, we do not believe that such impairment is “other-than-temporary” at June 30, 2008 as defined under FSP 115-1. As a result, our investment in this non-marketable equity security is carried at cost on our Consolidated Balance Sheets. We will continue to review this investment for impairment in the future. There can be no assurance that impairment charges will not be required in the future, and any such amounts may be material to our Consolidated Statements of Income.

In its recent second quarter earnings release, TimeWarner reported that AOL revenues declined “16% ($196 million) to $1.1 billion, reflecting a 29% decrease ($200 million) in subscription revenues, offset in part by a 2% increase ($8 million) in advertising revenues.”

Google’s investment came with an AOL valuation of $20 billion. AOL is now being split into two businesses and readied for partial or complete sale. It’s likely that the company isn’t worth more than $10 billion in total, but we’ll see if and when any transactions occur.

Here are some tables from the Google 10Q filing:

Revenue by source:

Revenue sources

Note the significant increase in licensing revenues. Google’s explanation is as follows: “The majority of this additional revenue consists of fees derived from DoubleClick’s online ad serving and management services.”

Geographic distribution of revenues:

Geographic distribution

Note that ROW is driving a higher percentage of Google’s revenues now than a year ago.

Allocation of costs and profit margins:

Operations

R&D is flat, sales and marketing expenses have increased somewhat (but are down vs. a year ago), and Google’s net is just over 24 percent and up vs. a year ago.

Related Topics: AOL: General | Channel: Industry | Google: Business Issues

Sponsored


About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

Connect with the author via: Email | Twitter | Google+ | LinkedIn



SearchCap:

Get all the top search stories emailed daily!  

Share

Other ways to share:
 

Read before commenting! We welcome constructive comments and allow any that meet our common sense criteria. This means being respectful and polite to others. It means providing helpful information that contributes to a story or discussion. It means leaving links only that substantially add further to a discussion. Comments using foul language, being disrespectful to others or otherwise violating what we believe are common sense standards of discussion will be deleted. Comments may also be removed if they are posted from anonymous accounts. You can read more about our comments policy here.

Comments are closed.

Get Our News, Everywhere!

Daily Email:

Follow Search Engine Land on Twitter @sengineland Like Search Engine Land on Facebook Follow Search Engine Land on Google+ Get the Search Engine Land Feed Connect with Search Engine Land on LinkedIn Check out our Tumblr! See us on Pinterest

 
 

Click to watch SMX conference video

Join us at one of our SMX or MarTech events:

United States

Europe

Australia & China

Learn more about: SMX | MarTech


Free Daily Search News Recap!

SearchCap is a once-per-day newsletter update - sign up below and get the news delivered to you!

 


 

Search Engine Land Periodic Table of SEO Success Factors

Get Your Copy
Read The Full SEO Guide