Google's CFO addresses slowdown

Here, verbatim, is what CFO George Reyes said about slowing of growth rates for online advertising, and what that means for Google.

Elinor Mills Former Staff Writer
Elinor Mills covers Internet security and privacy. She joined CNET News in 2005 after working as a foreign correspondent for Reuters in Portugal and writing for The Industry Standard, the IDG News Service and the Associated Press.
Elinor Mills
2 min read
Google CFO George Reyes told attendees at a Merrill Lynch investor conference Tuesday that online-ad growth rates were slowing, prompting a sell-off in the company's stock.

Here, verbatim, is what Reyes had to say about the situation.

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George Reyes, CFO of Google, discusses how he thinks sticking with ads as the main source of revenue will continue to bring success.
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After 18 months of seeing rapid growth from engineers perfecting Google's advertising system, "really most of what's left is just organic growth, which means you have to grow your traffic and you have to grow your monetization," Reyes said. "Clearly our growth rates are slowing. And you see that each and every quarter. And we're going to have to find other ways to monetize the business.

Asked if online-ad monetization had peaked, he replied: "We're getting to a point where the law of large numbers starts to take root?. ($6 billion in 2005 revenue) is nothing to sort of shake a stick at. But at the end of the day, growth will slow. Will it be precipitous? I doubt it. Are there more things we can do to sort of improve revenue performance? Probably. So I'm not turning bearish at all. I think we've got a lot of growth ahead of us. The question is at what rates?"

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"Growth will slow"--Hear Reyes discuss his outlook on Google's future.
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"Advertising revenue is still about 97 to 98 percent of our revenue. I get a lot of questions from investors, 'Well gee, that's risky. You ought to diversify,'" Reyes said. "Our collective view as a management team is that at some point in time we will diversify. But right now the opportunity is so immense, depending on what data you subscribe to. People believe we are still in the very early innings of search penetration and the evolution of search."

When asked about the company's bid to build a free Internet wireless network in San Francisco, Reyes said: "We made some similar related investments in broadband-over-power-line a year and a half or so ago....I would characterize all these things as interesting experiments."