Webware

Google CEO Eric Schmidt feels like a man with a glimpse of open highway after being stuck in traffic for hours.

Google is ready to once again hit the gas, with plans to invest in people, products, and companies over the next several months now that it feels much more confident about its business and the economy. When the last recession hit in 2001, Google was still a small growing company, but a year ago the crumbling economy spooked executives into caution mode as they tried to anticipate just how bad things might get.

Now they know. "The worst of the recession is clearly behind us," Schmidt said following Google's announcement of third-quarter earnings that were stronger than financial analysts had expected. "Because of what we've seen we can be optimistic about the future."

That means Google is about to go on an investment binge; although, it probably would object to the term "binge." The most likely scenario is that Google plans to buy a few more companies than it has in the past year, open the hiring floodgates to the types of engineers and salespeople that fit within Google culture, and make sure it has the right technology assets to continue to dominate the search landscape.

That's not good news for anybody who competes with Google. Yahoo reports earnings Tuesday, and Microsoft next Friday, so it's hard to know if they are feeling as optimistic about the upcoming quarter. But Yahoo has been focused more on big strategic questions and product rollouts during the past quarter, and Microsoft CEO Steve Ballmer told CNET earlier this month: "I don't think things are getting worse, but I don't think they're getting a lot better yet either" as Microsoft prepares to launch Windows 7.

One year ago, Google executives weren't sure what kind of mess they had on their hands, as banks failed and markets plunged, said Patrick Pichette, Google's chief financial officer. "Twelve months ago there was a massive crisis going on, and we decided at that time to be prudent about navigating these uncharted territories. (Now) we'll go back to what we do well: innovate, invest, and build the future."

Search will be the main beneficiary of this increased investment, Schmidt said. "We want to get to the perfect search engine," he said, emphasizing that Google's primary focus has always been and will continue to be search despite all the other areas the company has tackled. Mobile searches are growing at a 30 percent clip, Schmidt said, emphasizing that sector as another area slated for investment.

And where there's search, there's advertising, spurring Google to look for new ways of showing ads to searchers. "Many of our advertisers would like to find more ways to spend money with Google if our products would allow them to do that," Schmidt said.

Along those lines, Google is working on developing new kinds of ads, such as the local listing ads that Google is testing in San Francisco and San Diego that offer advertisers a flat-rate listing in the sponsored links, said Jonathan Rosenberg, senior vice president for product management. (Try "San Francisco coffee" in Google for an example.)

Schmidt would like to see Google spend a little bit more on capital expenditures over the next several months, after the company took a cautious approach to such spending over the past year. He noted that Google has been able to wring efficiency from existing servers by tweaking its software for multicore processors, but maintaining Google's army of servers is a competitive advantage: infrastructure spending "creates a very significant platform for future growth."

And Schmidt declared Google "open for business" as far as acquisitions are concerned. He said essentially the same thing earlier in the year, but took things a little bit farther in saying that not only would Google continue to look at small technology companies, it was considering larger acquisitions on the order of YouTube ($1.65 billion) and DoubleClick ($3.1 billion). However, Google is unlikely to make that big a buy more than once every year or two, he said.

Could Google be overconfident? After all, unemployment still remains high, which could mean that retailers are in for another poor holiday shopping season. And any recovery could take quite some time before individuals and businesses feel like spending money like it's 2007.

But Google seems to think that now that it has a baseline for how bad things will get, it can be more aggressive with its formidable resources. If you had taken the worst punch the economy has delivered in generations with little difficulty, you'd probably feel the same way.

Updated 1:30pm PDT with a few additional details, and again at 2:40pm following the conference call.

Google's revenue grew more strongly than expected during its third fiscal quarter, in a sign that ad spending is getting back on track.

Excluding traffic acquisition costs of $1.56 billion paid to Google partners, the company reported revenue of $4.38 billion, exceeding analyst estimates of $4.24 billion and backing up CEO Eric Schmidt's recent statements that Google was seeing more spending from advertisers. Overall revenue was $5.94 billion for the period ending September 30, an increase of 7 percent compared to the third quarter of 2008.

Schmidt echoed those statements on a conference call following Google's earnings release. "While there's obviously a lot of uncertainly about pace of economic recovery, we believe the worst of the recession is behind us," he said.

Net income according to generally accepted accounting principles was $1.64 billion, an increase of 27 percent compared to the same period last year. That's equivalent to earnings per share of $5.13. Excluding costs related to stock-based compensation, earnings per share were $5.89, exceeding analyst estimates of $5.42.

That increase in profitability was probably helped by a decrease in employee headcount. As of the end of the third quarter, Google had 19,655 people working for it around the world, as compared to 19,786 employees at the end of its second quarter.

Revenue from ads placed on Google's sites rose 8 percent to $3.96 billion, while revenue from ads sold through the AdSense program to third-party Web sites increased 7 percent to $1.8 billion. YouTube took additional steps toward profitability as well, but still isn't quite there, although Google reported that major advertisers such as Hewlett-Packard and McDonalds are seeing positive results from campaigns placed on YouTube.

Cost-per-click was down 6 percent compared to last year but up 5 percent compared to the second quarter, indicating that prices for Google ads are still below historical levels but are strengthening. Patrick Pichette, Google's chief financial officer, cautioned analysts on the conference call that some of the cost-per-click fluctuation is also influenced by changes in currency exchange rates, and that Google is increasingly doing business in countries where the cost-per-click is lower than in established economies. Along those lines, international revenue also increased as a percentage of Google's overall total, rising to 53 percent of the total as compared to 51 percent last year.

Google plans to start investing significantly during the rest of the year, planning to increase hiring, acquisitions, and capital expenditures. It tread cautiously in those areas during the last year, although Google was able to see infrastructure benefits without heavy capital expenditures by investing in software enhancements for servers with multicore processors, which made the whole operation more efficient, Schmidt said.

Financial software maker Intuit has signed an agreement to acquire personal finance service Mint.com for $170 million.

"With this transaction, Intuit will gain another fast-growing consumer brand and a highly successful Software as a Service (SaaS) offering that helps people save and make money," Intuit CEO Brad Smith said in a statement Monday. "This move will enhance Intuit's position as a leading provider of consumer SaaS offerings that connect customers across desktop, online and mobile."

TechCrunch reported the deal Sunday night, citing unnamed sources.

Mint, a start-up launched two years ago that tracks personal finance data, became a CNET Webware 100 winner in 2008 and again in 2009. It was also the 2007 winner of the TechCrunch50, which kicks off once again Monday in San Francisco.

Mint's features have apparently helped it attract a younger, more diverse demographic than Intuit's Quicken Online. Mint founder and CEO Aaron Patzer told CNET News last year that 40 percent of his company's users are women. He claimed Quicken's demographic was still "85 percent men." Assuming that's true, it would appear that Intuit can significantly expand its base with the Mint acquisition.

When the deal is made final, Mountain View, Calif.-based Mint will become part of Intuit's Consumer Group, which includes both Quicken and TurboTax. Patzer will become general manager of Intuit's Personal Finance group.

Although Mint and Intuit's Quicken Online are direct competitors, Intuit said it plans to maintain both products. According to Intuit, they serve "separate and equally important purposes."

The acquisition is expected to become final in the fourth quarter, pending regulatory review.

If any class of financial-services firm should have become extinct in 2008, it's the hedge fund. Hedge funds bled $154 billion in 2008, according to Lipper Hedgeworld, with 1,500 hedge funds closing shop, as reported by The New York Times.

Amazingly, however, 659 new hedge funds launched amid this financial bloodbath, and these new hedge funds are looking to build high-performance trading platforms on the cheap, a trend that bodes well for Marketcetera.

Hedge funds need to save money. Who knew?

It's important to remember that today's aren't yesterday's spendthrift hedge funds. I spent the morning with a friend who left a large financial-services firm to join a small, $250 million hedge fund in June. He represents a new demographic in the hedge fund world, one that cares about fund performance and cutting fund costs.

A lot of hedge funds still in business saw their top traders leave when the economy imploded, only to set up new funds. These new independents couldn't make money at the old firms because their performance was so underwater, it would take years to get back enough in positive gains to start cashing in on performance fees. Meanwhile, fund sizes under management began shrinking, with redemptions and fees getting slashed in the process.

This means a new breed of leaner hedge fund is rising, hedge funds that arguably could spend lavish sums on trading platforms but learned enough from the market implosion to save money wherever possible.

Marketcetera fills this need, particularly now, with its hosted offering. I've covered the company before but continue to be impressed by its speed of innovation.

The company launched Marketcetera 1.0 in January 2009, then hit version 1.5 in April 2009 (adding support for multiple traders and some key data feeds and real-time analytics), and now, in June 2009, the company's open-source trading platform is sitting on the NYSE's high-performance cloud.

Pretty impressive.

Equally impressive is where the company expects to take open source next, as can be seen in this YouTube video. The proprietary-software industry serving hedge funds and other financial services companies just got a wake-up call.

Follow me on Twitter @mjasay. Perhaps if enough people follow me, I'll be able to afford to lose an investment in a hedge fund.

Online restaurant reservation provider OpenTable is getting ready to go public.

According to a release, the company will price its initial public offering at $20 per share.

But a share price doesn't tell you the whole story about a company. Whether you're thinking about investing in OpenTable, or you simply want to see why the company's executives believe that it has a good chance to be successful on the Nasdaq, there's no better way to find out than to look at its current state of operations.

Profits (or no?)
According to its latest SEC filing, OpenTable earned $16 million in revenue during the three months ended March 31. During the same period in 2008, it earned $13.2 million in revenue. For the first quarter of 2009, the company generated a profit of $366,000. Last year, it lost $87,000.

Annually, OpenTable hasn't fared so well. According to its 2008 income statement, the company lost $1.02 million on revenue of $55.8 million. In 2007, the company generated a profit of $9.2 million on $41 million in revenue. That said, its profit was the result of a $9 million tax benefit. It lost $856,000 on operations in 2008 before it incurred that benefit.

Managing your money online has become much easier with the help of services that monitor your bank accounts and other financial information. I've found five sites that do a fine job of providing information and data to help you make more informed financial decisions.

Buxfer

Buxfer offers a simple tool for managing your money online. And since it lacks in-depth assessment into your financial health, it's great for beginners.

Buxfer allows you to link your credit card and bank accounts to the site. If they belong to a major institution like Bank of America, the site asks you if you want it to synchronize the accounts for you. If so, it will then ask you to input your bank username and password and indicate how often Buxfer should synchronize.

Where Buxfer really shines is in its simplicity. The service features easy-to-understand tabs that provide step-by-step instructions on how to add accounts, see reports, and create budgets. In fact, creating accounts and budgets takes just a few minutes to complete. That said, Buxfer's reports leave much to be desired and they generally tend to offer simple information--revenue, expenses, and balances--instead of more important data like estimates and projections. I should note that projections are available, but only in the premium version of the service.

Buxfer is simple and responsive. If you're looking for something basic, it's a great place to start.

Geezeo

If you want some extra help beyond tracking your financial information, Geezeo does a fine job. But much like Buxfer, it fails to provide extensive data to keep you exceptionally informed.

Geezeo is easy to use, which makes it appealing to beginners. After signing up for an account, users can add bank account information, as well as credit cards, loans, and investments. Geezeo will track all the changes in those accounts once added. Armed with that information, Geezeo creates a budget for you and sets goals to see how well you're managing your money. The site also generates reports to help you see where you stand financially. But much like Buxfer, those reports are too simple to offer in-depth and most importantly, actionable information.

But it's Geezeo's community that the company touts. Aside from providing financial information, Geezeo lets you connect with other users and ask them for financial advice. Users can also create groups where like-minded individuals can discuss financial goals, and for harder questions you can ask Geezeo "Experts" for help. Most of the time, those tips are generic, though.

Geezeo is a fine service if you want to connect with others during your financial planning. And since it's free, it's probably worth trying for a little while, at least.

Mint

Mint is a fine service that takes aim at Quicken Online. But unlike Quicken, it doesn't provide the kind of depth that you would expect from a full-featured money management tool.

Similar to its competitors, Mint allows you to input account and credit card information, as well as create a personal budget and manage investments. Its core function is to look at your spending habits and recommend offers that will help you save money. If you have a high-interest credit card, or you're spending too much on a bill, Mint's advertising network will find offers from partners and suggest you sign-up for the respective service. If you do, Mint gets a small portion of the revenue generated from that switch.

Mint will automatically capture financial information from more than 3,500 financial institutions, which makes it a handy tool to keep your accounts up to date. And just like its competitors, it can send alerts to your mobile phone to tell you when to pay a bill. That said, Mint requires you to give it your account information to track your financial data. Although it's a trustworthy site, I just can't bring myself to entrust that information to a small firm.

Quicken Online

Like Mint, Quicken Online is targeted at those who don't require complex financial tracking services. That said, Quicken Online will still do some heavy lifting and it does a fine job of monitoring and forecasting your financial picture.

Forecasting is Quicken Online's most compelling feature. On the service's main page, it shows what's left in your bank account, your risk of overdraft, your risk of a low balance, and the expected spending you will incur in the next 30 days. It derives that forecast from your bank accounts, investments, and other financial data. As long as all that information is accurate, Quicken will probably be right most of the time.

Quicken Online boasts a "Where am I spending?" page, which files all your spending into different categories, like groceries and electronics, to give you a full view of where your money is going. It then allows you to set goals to see if you can rein in spending.

Although Quicken Online is the most capable finance tracking software I used, it's not nearly as powerful as its desktop counterpart, and real power users probably won't find enough value to justify using it. But for the average person who has a mortgage, an investment account, and a couple bank accounts, it's worth using. Especially now that it's free.

Wesabe

Much like Geezeo, Wesabe employs the wisdom of its community to help you monitor spending and get advice on how to pay off debt sooner, while saving more money.

Just like the competing services, Wesabe lets you drop in your bank information, then starts tracking that data. It examines how you spend your money and helps identify areas where you could tighten your belt by providing tips from its community. For example, when Wesabe recognizes when you purchase groceries, it provides you with a list of tips from other users on how to save money for your next trip to the store. It also finds ways to pay off debt sooner by looking, once again, toward the community for help.

Unfortunately, Wesabe doesn't offer much more than that. It provides basic goals and tips wherever you turn, but if you want investment advice or more capable financial monitoring it's not ideal. Wesabe is aimed more at the beginner than anyone else.

Yahoo CEO Jerry Yang is stepping down and Carol Bartz has taken the reins as the company's new CEO. Most hope that she can fix Yahoo and return it to the place of dominance it once enjoyed. Or failing that, at least move it back into favor with shareholders. This will be difficult. The company was shaken by two rounds of layoffs during 2008 and a near shareholder coup over its treatment of Microsoft's acquisition bid, which contributed to its 59 percent stock price decline from its 2008 high of $30 per share to its current $12.31 per share (a $17 billion market cap).

But if you look at the Yahoo balance sheet, its stock is still overvalued, and, needless to say, Bartz has some difficult work in front of her to turn Yahoo around. Here's why. (Note that all the findings below are derived from Yahoo's 2007 Annual Report and 2008 third-quarter data. The company plans to release 2008 fourth-quarter data on January 27.)

Cash: Ideal. Income: Declining
When evaluating the financial health of a company and determining whether or not you should invest your money in its stock, it's best to start with the easy figures, income and cash. And in that department, Yahoo, while still healthy, has hit some troubling times.

According to its latest quarterly filing data, Yahoo's operations have hit a snag. Its latest reported quarter, ending September 30, 2008, yielded the company about $54 million in profit, which is a sharp decline from its three previous quarters, which saw the company take profits of $205.72 million, $542.16 million, and $131.22 million, respectively.

That said, Yahoo has been able to increase its cash reserves. According to third-quarter data, its total cash on hand increased by about $100 million over the previous quarter, to $2.14 billion. Considering Yahoo's 2007 Annual Report claims the company had $1.5 billion on hand by the end of 2007, and given its current cash growth, we can expect its coffers to have grown significantly year-over-year once it reports its fourth-quarter earnings later this month.

While Yahoo still enjoys a healthy, albeit declining, profit each quarter as well as ample cash reserves, it's trailing far behind its main competitor, Google. Based on Google's financial data, the online powerhouse enjoyed a $1.28 billion profit during the quarter ending September 30, 2008, and its total cash on hand has grown to more than $8.3 billion. That's a far superior position to Yahoo.

Balance sheet health: Outstanding
When it comes time to examine the value and growth potential of a company, its balance sheet can be a key indicator of whether or not you should invest money. With no long-term debt and billions in assets in its financial structure, Yahoo is in a good position.

According to its latest quarterly filing, Yahoo's assets--cash, investments, receivables, and property--are valued at $13.9 billion, while its liabilities are valued at just $2.3 billion. The balance can be found in the company's Stockholders' Equity section, which boasts more than $16 billion in retained earnings (the portion of the net income that is kept by Yahoo) as well as Additional Paid-in Capital (cash received from investors who are paying more than the par value for each share acquired). But Yahoo's balance sheet also includes $5 billion in Treasury Stock--stock that is repurchased by the company to reduce the number of outstanding shares on the market. That reduces the total amount of stockholders' equity, but it should be noted that it's the result of a repurchase performed in 2005.

Yahoo has no long-term debt, which is a major advantage for a company experiencing the kind of upheaval Yahoo is in the middle of, and the company has a healthy ratio of assets to liabilities. In other words, the balance sheet tells us there appears to be little need to worry Yahoo experiencing financial ruin anytime soon.

But competitor Google, once again, trumps Yahoo with $30 billion in assets and just $3.3 billion in liabilities. Google only has $13 billion in retained earnings and capital surplus, but it has yet to buy back any shares, so it has no Treasury Stock in its balance sheet. Much like Yahoo, Google is in an enviable position, but with more cash and more assets, it's in better shape than Yahoo.

There's no debating that Google is a successful company. Aside from dominating the U.S. search market and the online advertising business, the tech giant has become a Wall Street darling, thanks to strong profits. Google's stock price that, at its height, rose above $700 per share--the company at that time had a market capitalization of approximately $250 billion.

But as the economy has slowed and the world sank deeper into a recession, Google has fallen with it. The company's stock price is now just $312 per share with a $98.42 billion market capitalization. Online ad spending will slow during 2009, and some investors believe Google could be impacted greatly.

Realizing that, I thought it would be a good time to look into Google's real value and decide if it's worth investing in, even as economic troubles continue to plague the world. Is Google a good bet for long-term gain?

Let's explore the company's financial health and find out. (Note that all the findings below are derived from Google's 2007 Annual Report and 2008 third-quarter data. The company plans to release 2008 fourth quarter data on January 22.)

Cash and income: Ideal and ideal
When evaluating the financial health of a company and determining whether or not you should invest your money in its stock, it's best to start with the easy stuff--income and cash. And in that department, Google is performing extremely well.

According to its latest quarterly filing data, Google's operations have grown at a healthy rate. Its last reported quarter, ending September 30, 2008, yielded the company more than $1.28 billion in profit, up more than $40 million over the previous quarter, and $200 million over the same quarter in 2007.

Google's cash reserves are equally healthy. The company's total cash-on-hand increased more than $3 billion year-over-year in 2007 and so far, after three quarters reported, the company has added more than $2 billion to its coffers in 2008. Expect that number to climb higher than $3 billion once again when the company's 2008 Annual Report is released.

Balance sheet health: Outstanding
When examining the value and growth potential of a company, its balance sheet can be a key indicator of whether or not you should invest money. Some companies have strong profit figures, but thanks to costly debt that's coming due, those profits may not adequately reflect the true financial health of the company. That said, you don't need to worry about anything of the sort with Google--it doesn't have any debt in its financial structure.

A quick check of Google's balance sheet reveals the online giant is in an enviable position. According to its latest quarterly filing, its assets--cash, investments, receivables, and property--are valued at more than $30 billion, while its liabilities are valued at just $3.3 billion. The balance can be found in the company's Stockholders' Equity section, which boasts more than $13 billion in retained earnings--the portion of the net income that is kept by Google--as well as Capital Surplus--capital received from investors who are paying more than the par value for each share acquired.

So what does all that mean? Google is extremely well-off. The company has no worry of long-term debt, which is a major drain on some, less-healthy companies, and with more cash each month, it's fully capable of acquiring other firms and paying its bills at the same time without borrowing funds from banks. That's a luxury only a select few companies can enjoy.

Charles Schwab improved its online trading platform Tuesday with the introduction of new features for its site, StreetSmart.com. According to the investment firm, clients will now have real-time performance reporting for closed positions, new short-selling tools, and more order types. The app will also feature new tabs for realized gain and loss data and information on shorting securities. The updates are available now on the Schwab service.

Privus Mobile, a company that provides mobile calling services, announced Tuesday that its Caller ID app is now available through Handmark stores, as well as mobile stores that offer apps for Windows Mobile, BlackBerry, and Palm devices. Privus Mobile's Caller ID feature gives users a cross-carrier option to find out who is calling, regardless of whether their name is included in the user's contacts. The app is available now without cost, thanks to a free trial period.

Move Networks, the company behind online video streaming for Fox, ABC, and a variety of cable networks, said it streamed 180 million hours of video last year. A hundred million hours of that coverage was in HD. The company estimates that it provided video for 55 million unique viewers during 2008 and it expects even more viewership during 2009 as more professional content makes its way to the Web.

TechCrunch is reporting that Clearspring, a widget distribution firm, has laid off several of its staff, though the company's CEO, Homan Radfar, would not say exactly how many employees were affected. Radfar told TechCrunch that the layoffs occurred during the "fourth quarter of 2008." For more layoff information, see CNET's Layoff Scorecard.

RipCode, a provider of Web and mobile video streaming services, announced Tuesday that it raised $12.5 million in funding to help it gain worldwide traction. The round was led by Granite Ventures, along with Hunt Ventures and Vesbridge Partners.