Yahoo, Google and Internet Math
Yahoo Inc. reported first-quarter revenue of $758 million. Looked at another way, Yahoo said revenue totaled $550 million. Rival Google Inc. said its first-quarter revenue totaled $390 million. Or maybe it was really $652 million.
Confused? Pity the investors trying to place a value on Google for its highly anticipated initial public stock offering.
For guidance, many look at Yahoo, another Internet company with a similar business to Google's and which has been public since 1996. But Yahoo and Google don't count revenue the same way, making it hard to compare many aspects of the two companies' finances. Google uses a more-conservative definition that has the effect of damping its revenue and increasing its profit margins.
DIFFERENT WAYS, DIFFERENT MEANS
See how Google and Yahoo stack up using each other's accounting methods.
The differences demonstrate that accounting standards may be "generally accepted," but they aren't always uniformly interpreted. And details about revenue-recognition policies buried in the fine print of financial statements can trip up less-than-seasoned investors.
In this case, the difference revolves around the way that Yahoo and Google treat revenue from small-text advertisements that they place on other companies' Web sites. The two Internet companies effectively act as technological intermediaries and quasi-advertising agencies, bringing together Web publishers and advertisers. Yahoo and Google get paid each time an Internet user clicks on an ad, then give some of that money to the Web publisher on whose site the ad appeared. (Yahoo and Google also accept ads for their own sites, and both companies account for them in the same way.)
In accounting terms, however, that is where the similarities end. Yahoo counts as revenue the "gross" amount it is paid. It counts its payment to the publisher as an expense, labeled as a "traffic acquisition cost." Google, by contrast, counts as revenue only the "net" amount remaining, after it pays the Web publisher.
Here's how it works in practice: XYZ Corp. places ads on the sites of UVW Corp., through Yahoo, and RST Corp., through Google. Both ads generate $5 in revenue, with $3 going to the publishers. Yahoo would count $5 revenue and book a $3 expense. But Google would record only $2 in revenue.
Experts say the difference shows how accounting practices are still evolving in relatively new forms of commerce such as the Internet. There isn't a universal right answer, they say; the proper accounting depends on the specifics of the advertising contracts.
"Financial reporting in this area is fluid right now," says Paul R. Brown, an accounting professor at New York University's Stern School of Business.
Indeed, until Jan. 1, the same distinction between "gross" and "net" revenue could be seen within two units of InterActiveCorp, the New York-based Internet company.
InterActiveCorp's Expedia travel-agency unit reports revenue on a "net" basis, after paying airlines and hotels. But InterActiveCorp's Hotels.com unit traditionally reported revenue on a gross basis, recording the entire price of a hotel room, including the portion it paid to the hotel operator. Hotels.com switched to reporting net revenue beginning this year, according to a filing with the Securities and Exchange Commission.
In the case of Yahoo and Google, the proper accounting treatment depends on whether the company is merely an "agent" facilitating a deal, or a "principal" that stands to lose money, if, for example, an advertiser fails to pay.
A Yahoo spokeswoman says the company reports gross revenue "based on our interpretation of the accounting guidance and our contractual terms." In SEC filings, Yahoo says it must use gross revenue because it is "the primary obligor" to the publishers.
Although it uses "gross" revenue in its financial reporting, Yahoo stresses its "net" revenue in presentations to analysts and investors. The spokeswoman says Yahoo considers the net figure "of more transparent economic value to investors."
Analysts generally agree. "We actually take a net revenue perspective on their numbers," says Jeetil Patel of Deutsche Bank Securities Inc. Mr. Patel says using net revenue makes it easier to understand Yahoo's different businesses and compare current with past results.
Google, by contrast, says in its SEC filing that it reports net revenue because "we are not the principal to transactions." Instead, Google says users view the ads on the Web sites of independent publishers, who determine what ads they accept. A Google spokeswoman declined to elaborate, citing the quiet period around the pending IPO.
"You have to know what all the mechanics are under the transaction to be able to say that is right or that's not right," says Jack Ciesielski, publisher of Analyst's Accounting Observer.
The accounting choices result in very different images for investors. For those who value companies based on revenue, or revenue growth, Yahoo's formal presentation makes its revenue appear to be larger, and growing faster. Yahoo's as-reported gross revenue grew 168% in the first quarter; net revenue grew a robust, but less-impressive, 94%.
Likewise, Google's choice of net revenue slows its growth rate, because revenue from the ads Google places on other sites is increasing faster than total revenue. In the first quarter, Google's revenue grew 122%. On a gross basis, however, revenue grew 162%.
When it comes to profit margins, the accounting choices create the opposite impression: Yahoo's accounting makes its profit margins appear smaller, and Google's makes its appear larger.
In the first quarter, for example, Yahoo reported a 17% operating-profit margin. Count only net revenue, however, and operating profits soar to 24%. Google reported a 40% operating-profit margin. Include gross revenue, and the operating margin slips to 24%.
The profit margins "are much more impressive if you report on a net-revenue basis," says Mark Mahaney, an analyst at American Technology Research in Greenwich, Conn.
The revenue-recognition issue doesn't affect the bottom line, where Yahoo reported $101 million in first-quarter net income, and Google reported $64 million.
But a different accounting choice by Google has a big effect there. That was Google's decision to reassess the value of stock options it has granted since 2001. In essence, Google said in its filing that it now believes it granted those options, mostly to employees, at lower exercise prices than they were really worth. Last year, for example, Google said it distributed nearly 20 million stock options, at an average exercise price of $2.65 a share. But details in the filing suggest Google now thinks its own stock was valued at roughly $31 a share last year.
As a result, Google said it had to recognize an expense for these underpriced options. In the first-quarter, its stock-compensation expense totaled $76 million, which reduced Google's net income by more than half from what it otherwise would have been.
So what is an investor to do? Mr. Mahaney recommends valuing Google, and other Internet companies, based on their free-cash flow, or cash generated from operations minus capital expenditures. "That removes a substantial amount of the distortions caused by different tax rates and what companies choose to include in terms of options and what they don't," he says.
On that basis, Yahoo looks considerably stronger than Google. Mr. Mahaney projects that Yahoo will generate $838 million in free-cash flow this year, compared with Google's $476 million.
雅虎和Google收入难做比较
雅虎公司(Yahoo! Inc., YHOO)公布第一财政季度收入为7.58亿美元。换个角度来看，雅虎称总收入为5.5亿美元。其竞争对手Google Inc.称，第一季度收入总计3.9亿美元。或许实际数字是6.52亿美元。
感到困惑吗？如今，在Google准备进行首次公开募股(IPO)之际，投资者正试图摸清Google究竟身价几何；这样的困惑增加了投资者的难度。
作为参考，许多投资者正从业务类似、并已于1996年上市的互联网公司──雅虎身上寻找线索。但是雅虎和Google的记帐方式并不相同，这为比较两家公司的财务状况制造了障碍。Google使用的会计方式较为保守，这导致其收入相对较低，而利润率较高。 上述差异说明，会计标准或许都是"公认"的，但不同公司对这些会计标准的解释却并不总是相同的。而埋藏在打印精良的财务报表之后的收入实现原则细节可能就是让那些投资新手马失前蹄的陷阱。
雅虎和Google会计方面的差别在于，他们对于那些放在其他公司网页上的文本广告收入的处理方式不一样。这两家互联网公司实际上都是科技媒介和准广告公司，它们充当了网络出版商和广告商之间的桥梁。网络用户每点击一次网上广告，雅虎和Google就会相应获得收入，之后它们需将其中的部分收入付给刊载该广告的网络出版商。（雅虎和Google同时也在自己的网页上面放广告链接，两家公司处理这部分广告收入的会计方式是一样的。）
然而，两家公司会计方式的相似之处也就仅此而已了。雅虎将广告客户支付的款项"总和"计为收入，而将它向网络出版商支付的款项以"流量获得成本"为名计入费用。而Google仅将扣除向网络出版商支付款项后余下的"净值"计为收入。
举例来说：如果甲公司通过雅虎在乙公司网页上放置了一个广告，并通过Google在丙公司网页上也放置了一个广告。这两个广告都产生了5美元的收入，其中3美元由出版商得到。这样，雅虎就会计入5美元收入，同时计入3美元费用。而Google只是在收入中计入2美元。
专家称，这种差距说明，在互联网等相对较新的商业领域，具体会计操作还在发展之中。专家们认为，目前找不到一个绝对正确的答案，适当的会计方式要视广告合约的细节而定。
纽约大学(New York University)斯特恩商学院(Stern School of Business)的会计学教授鲍尔?布朗(Paul R. Brown)说，目前互联网领域财务报告的形势并不固定。
事实上，就在今年1月1日之前，总部位于纽约的互联网公司InterActiveCorp旗下的两家子公司还在分别采用上述两种不同的会计方式计入收入。
InterActive旗下的旅行社子公司Expedia以"净值"计入收入，其中扣除了支付给航空公司和酒店的款项。但InterActive的Hotels.com子公司则用传统的"总和"会计方式，将酒店客房的全价都计在收入之中，其中包括了向酒店运营商支付的部分。根据该公司提交美国证券交易委员会(Securities and Exchange Commission, 简称SEC)的文件，Hotels.com今年开始转而采用净值法计入收入。
而就雅虎和Google而言，哪种方式更为恰当要取决于这家公司是促成交易的中介，还是承担盈亏的交易主体，如果是交易主体，那么在广告客户没有如约付款的情况下，该公司将承担损失。
雅虎发言人称，该公司以总和计入收入的依据是公司对于会计原则的理解和所签署合约的条款。该公司在提交给SEC的文件中称，它必须计入收入总和，因为雅虎要对网络出版商承担首要责任。
虽然雅虎在财务报告中使用"总收入"，但它在给分析师和投资者的相关报告中会强调净收入的情况。雅虎发言人说，公司认为，对于投资者来说，净值在反映公司业务的经济效益方面更透明。
分析师对此普遍表示赞同。德银证券(Deutsche Bank Securities Inc.)的帕特尔(Jeetil Patel)说，他们实际上是从净值的角度考察雅虎的业绩数字的。他说，采用净值更易于对雅虎的各项不同的业务作比较及将现在的业绩与过去作比较。 至于Google，它在提交给SEC的报告中说，它将广告业务按净收入计入财务报告的原因是，在广告业务中，它不是主要的一方。Google表示，互联网用户在网上看到的独立网络出版商发布的广告中，广告的内容是由这些出版商决定的。Google发言人拒绝对此作详细说明，理由是公司目前正处于上市前夕的静默期。
Analyst's Accounting Observer的发行人(西谢尔斯基Jack Ciesielski)说，只有了解整个交易的机制，你才能判断交易方的会计处理是否恰当。
各家公司选择的不同的会计处理方式在投资者面前呈现出不同的财务形象。对于那些以收入或收入增长幅度评价一家公司的投资者来说，雅虎正式的财务报告中的处理使其收入看起来更高，增幅也就更大。根据雅虎已公布的财务报告，今年第一季度，其总收入增长了168%，净收入94%的增幅虽也很强劲，但相比之下要逊色不少。
同样，由于Google选择只将净收入计作公司的收入，它的收入增长率就比较低，因为Google放在其他网站上广告的收入增幅要高于该公司广告总收入的增幅。第一季度，Google自己的收入增加了122%，而其总收入的增幅则为162%。
但谈到利润率，上述不同的会计处理结果给人的印象刚好相反：雅虎的会计方式得出的利润率似乎较低，而Google的方式得出的结果较高。
比如，雅虎公布第一季度的运营利润率为17%。不过，如果按照净收入计算，其运营利润率应该是24%。Google公布的运营利润率是40%，但如按总收入计算，其运营利润率应是24%。
American Technology Research的分析师马赫尼(Mark Mahaney)说，如果按净收入公布业绩，那么相应的利润率就会偏高些。
不过，不同的收入确认方式并不会影响净利润。雅虎公布第一季度的净利润是1.01亿美元，Google该季度的净利润是6,400万美元。
但是，Google所选择的会计处理方式在有些方面还是产生了很大影响的。正是因为这一点，Google决定重新估算它2001年以来所授予的股票期权的价值。Google在给SEC的文件中说，总的来说，它现在认为所授予的这些股票期权（大多是派发给员工的）的执行价比它们的实际价值要低。
Google举例说，去年它授出了约2,000万股股票期权，平均执行价为每股2.65美元。但文件显示，Google现在认为，它的股票去年的"股价"应相当于每股31美元左右。
因此Google表示，它需要为这些价格被低估的期权计入一笔费用。第一季度，Google的股票薪酬费用总额为7,600万美元，如果不考虑这一项目，Google该季度的净利润将比公布的净利润高出一倍。
那么投资者到底应该作何反应呢？马赫尼建议，在评价Google和其他互联网公司时，应主要参考它们的自由现金流指标（即从经营现金收入中减去资本支出）。他说，采用这个指标，可以不必考虑由于公司的不同税率和它们在处理期权时选择包括或不包括某些内容而对业绩情况产生的干扰。
如果依照上述现金流评价方式，雅虎的实力看起来要比Google强得多。马赫尼预计雅虎今年的自由现金流将达8.38亿美元，而Google将达4.76亿美元。
