Monday 4 July 2011
Treasure Land India - 11 billion $
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| Treasure Coins - Pure Gold From Past Century |
-Special Correspondent bluffer Team A court-ordered search of vaults beneath a temple in India has turned up a treasure worth at least $11 billion, according to reports from the Indian state of Kerala.
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| Caspar View -Elegant Pilgrimage |
- Rubies, sapphires, emeralds and pearls
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| Car Festival Decoration |
- Replicas of coconut shells made of pure gold
- Hundreds of thousands of gold and silver coins, some dating to the 16th century
- Gold chains as long as 18 feet
- Solid-gold human figurines and idols
- Crowns and pendants
- Gold and silver bars
The wealth was amassed in at least six vaults, some of which had not been opened in 150 years, according to media reports. India's Supreme Court ordered an inventory of the vaults after hearing a private complaint seeking "more transparency and trustworthiness in the temple administration," according to a report on the news website daijiworld.com.
The former royal family of Travancore manages the temple. For an explanation about how the treasure might have been amassed, check out this report from CommodityOnline.com.
The Kerala government said Monday the treasure will remain property of the shrine, according to media reports.
"The wealth belonged to the temple and it will be preserved where it was found. There is religious and historical significance to the findings. The state will ensure its security," Kerala Chief Minister Oommen Chandy told the Times of India.
As word of the find has spread, Kerala police are asking for help to safeguard the treasure, according to media reports.
"It is too big a challenge for the police. We have no trained personnel to manage such a huge treasure. We have sought the help of several agencies who can really help us," Jacob Punnose, director general of the Kerala police, told India Today.
What might the treasure, which the Economic Times of India says is likely the biggest in the country, mean for Kerala, a south Indian state of 33 million people?
-Latest News Update
Happy Independence Day- United States
People across the U.S. are marking the 4th of July with parades, fireworks, barbecues — and competitive eating.
President Barack Obama planned to host a barbecue at the White House to celebrate the nation's 235th Independence Day.
Thousands of revelers camped out near the Washington Monument to catch a glimpse of the fireworks.
Wet weather around the country put a damper on celebrations on Sunday from St. Louis, where a concert and fireworks display was cancelled, to Washington D.C., where Capitol Police evacuated where spectators on the National Mall who were watching rehearsals for Monday's "Capitol Fourth" show.
White House Statement
A statement on the White House's website said Michelle Obama had sent a message to its email list, "wishing them a Happy Independence Day and encouraging all Americans to honor our brave men and women in uniform by volunteering to give back to the military families who sacrifice so much to keep us safe.""We know that when our troops are called to serve, their families serve right along with them. For military kids, that means stepping up to help with the housework and putting on a brave face through all those missed holidays, bedtimes and ballet recitals," she said. "For military spouses, it means pulling double-duty, doing the work of both parents, often while juggling a full-time job or trying to get an education."
Courtesy - msnbc
Google Offers Versus Groupon: The Portland Throwdown
Google Offers just finished its first month. Google has been testing its Groupon compete in Portland and I’ve been closely tracking the results.
Doing a head-to-head comparison like this is a bit difficult because the two companies run deals differently. Groupon runs multiple deals each day. Many Groupon deals span multiple days, with some running for three days. Google Offers on weekends ran for two days. For each run, I picked a representative deal from Groupon and compared it with the deal from Google.
I looked at 24 deals from each company. For these deals, the median deal value for Google was $1,987 compared with $8,900 for Groupon. In its first month, Google grossed $129,000 compared with $331,000 for Groupon. Five of the Google Offers grossed less than $1,000; all of the Groupon offers exceeded this. This is to be expected given Groupon’s longstanding presence in the market; Google hasn’t had the time to build a large subscriber base. Actual Groupon revenue (across all deals) would be significantly higher.
“Our Portland trial is going very well for us,” said Eric Rosenblum, director for Google Offers. “Our intention was to start learning how to source great deals, provide excellent merchant and customer service (including phone and email support), and deliver value to our customers, and we are certainly doing that. In terms of our commercial results, the majority of our deals in month one either outperformed or were in-line with our expectations while around a quarter underperformed. Our total units are above where we had projected, but we still need to get better about predicting performance.”
One significant difference was the median sale price. Google’s median sale price was $10; Groupon’s was 4 times that at $40. This was the result of Groupon having a higher percentage of services and activities such as rock climbing and screenprinting classes.
Cash sells best
An area of concern for deal companies is that the deals that generate the most revenue are the ones that are least sustainable for businesses.
The most popular deal in the month for Google Offers was an offer for $20 worth of merchandise at Powell’s Books for $10. 5,000 Powell’s vouchers sold out in a matter of hours. Powell’s is a Portland institution and the deal was the equivalent of selling cash for half off; there’s no reason not to buy one.
The next day, Google ran an offer for personal training and fitness classes. That deal sold 9 units. The worst performing deal over the course of the month was an acupuncture deal that sold 5 units over 2 days. Google grossed $300 on that deal.
Although Google would not comment on specific deals, I expect that the Powell’s deal was heavily subsidized by Google in order to build its mailing list. Rosenblum did say deal subsidies are something they would consider for appropriate merchants. I can’t think of a more appropriate merchant.
The worst performing Groupon that I tracked grossed $1,440 and the best performing deal grossed $44,000. Excluding the Powell’s deal, which grossed $50,000, the best Google Offer grossed a bit more than $23,000.
The closer a deal is to a cash equivalent for an everyday need, the more it will sell. 3 of the top 5 grossing Google deals were for restaurants; another was for 62% off GoKart racing. (That was the one deal that outperformed my expectations.)
Deals like dentists, guitar lessons and medical services (one Groupon offer for a breast exam sold 12 units) are more sustainable for businesses but are low frequency activities. Groupon has a large enough mailing list that it can still generate significant revenue off deals that are sustainable for businesses. But it also means that they will have to keep growing their list rapidly as people tire of such deals.
Offer restrictions
Google Offers generally had more restrictions than offers on Groupon. While this may sound like a bad thing, I believe it’s better for the ecosystem long term. An offer for Le Bistro Montagerestricted the deal to weekend brunch. This is a new product offering for the restaurant, so it serves to expand awareness versus potentially displacing existing business. An offer for aMediterranean cafe wasn’t valid for lunch.
A deal for a barber shop was “valid only for barbers Brian or Jennifer.”
In at least one case, I thought the restrictions went overboard. Here are some of the restrictions for a deal at an Italian restaurant:
Reservations required and subject to availability. 24-hour cancellation policy applies or you’ll forfeit your voucher. Not valid during holidays, on happy hour prices or at the Jade Lounge. Must mention Google Offers when making reservations.
Although the intent is to smooth demand, these are unusual restrictions and I worry they could create a bad customer-service dynamic as consumers who purchase the deals and don’t read the fine print try to redeem them.
The final deal of the month didn’t get a lot of traction because of its low value. It offered $6 worth of Vietnamese food for $3. The description noted that a small bowl of pho is $6.50, large is $7.50. For a deal seeker, that’s an unattractive deal because they would have to pay additional cash out of pocket. For many consumers, prepurchasing a voucher to save $3 hardly seems worth it.
Sales process
A common complaint about Groupon from merchants is that they weren’t made aware that they could cap a deal or that a cap was ignored. We published an email from a former Groupon employee who stated that some salespeople low-balled volume estimates to get merchants to run deals uncapped.
The feedback I’ve received from merchants about Google Offers in Portland indicates that Google sales tries to ensure that the deal structure is suitable to the business’s needs. (But then again, this was the launch of the service, so you’d expect Google to be extra vigilant). One merchant mentioned that Google asked if she wanted to restrict the deal to new customers only. (She opted not to.) Another merchant told me that while she wouldn’t consider running a Groupon, she was considering a run with Google Offers. She liked having the flexibility to restrict the offer to just breakfast, a time when most people aren’t aware that they’re open.
One complaint about Google Offers that was reported by Business Insider is that Google sales reps have implied that running an offer would make them #1 in Google search results. Google spokeswoman Jeannie Hornung said, “We have a training process in place for sales people that has made and continues to make it very clear that Offers has nothing to do with search. As we said before there was clearly a misunderstanding.”
I believe that Google won’t let Offers influence search results. I’m equally certain that when you build a large sales organization, some people will try to close deals by implying things that aren’t true. Google’s reputation in search is too important to damage. Any perception of such tying would also raise antitrust concerns. Google would be well served to make it very clear in its merchant help center and its merchant agreement that search results are not helped by running an offer. If it were my product, I would have merchants specifically acknowledge that they understand that Offers doesn’t generate an SEO benefit.
Conclusion
It’s still the early days of the daily deal business and Google has put out a very credible beta in Portland. Thirty days in, I stand by my claim that there’s not much that is original here.
I believe that they’re striking a better balance between merchant and consumer value than Groupon. The additional restrictions mean that merchants aren’t just selling cash at a substantial discount. Another key differentiator for merchants is more generous payment terms. Google pays out 80% of the merchant’s share in about 4 days and the remainder (subject to chargebacks) in about 90 days. Groupon pays out 1/3 in 5 days, 1/3 in 30 days and 1/3 in 90 days.
That should make for some interesting competition as Google’s product matures and it rolls out in more cities. Up next: New York and San Francisco.
Today's Health Tip - Fruit A Day
Strawberries
Strawberry milkshakes. Strawberry jam. Strawberry ice cream. Strawberry pie. Who doesn’t love the sweet, tart, and unmistakable taste of strawberries? Strawberries are cultivated worldwide, so the answer is probably not many people. They are beautiful, bright red, and smell heavenly. They are often eaten fresh, or in one of the treats listed above; in fact, their flavor is also reproduced and used in commercial food products.
An accessory fruit, derived from the plant’s receptacle instead of the ovaries, strawberries were first grown in France in the year 1740. They were really a hybrid of two different types of strawberry, a cross between the Fragaria Virginiana of North America (famous for its flavor) and the Fragaria Chiloensis from Chile and Argentine (famous for its size). Now, growers produce the woodland strawberry, first grown in the early seventeenth century.
Strawberries vary across color, size, flavor, ripening season, likelihood of succumbing to disease, and shape. Often the foliage of the plants is different as well. Growing methods vary as well, and cultivators use either the plasticulture method or the method of matted rows. Sometimes, in the off-season, strawberries are grown in greenhouses. Most growers use the plasticulture system to grow their strawberries.
Raised beds are formed and then covered in plastic after being fumigated. The plants are put through holes, and then irrigation tubes are placed under the plastic. The plastic prevents weeds from growing around the plant beds. At harvest time, the plastic is taken away. This system requires a long growing season, and invites high costs due to making and plastic coating the mounds. In colder climates, it is more common for growers to use the method of matted rows. It requires less maintenance and costs less to implement, but yields fewer fruit.
Another method of growing strawberries uses a compost sock, which gives strawberries with higher ORAC, or oxygen radical absorbance capacity, flavonoids, glucose, anthocyanins, fructose, malic acid, sucrose, and citric acid than fruit grown through other methods. Strawberries can also be grown by seed, but it’s not a widely used method in the commercial market. Seeds can be collected from the fruit themselves. Many people grow them at home in pots.
Strawberries are typically harvested and cleaned in the traditional way. Strawberries must be harvested by hand. The fleshy fruit are quite delicate, and machine processing would simply smash them. The packing and grading of the fruit happens in the field. Water streams and bumping, shaking conveyor belts wash the fruit as they move through processing. The United States produces the majority of the world strawberry market, followed by Spain and Turkey.
Many pests attack strawberries, including aphids, strawberry sap beetles, fruit flies, slugs, chafers, moths, strawberry root weevils, strawberry crown moths, strawberry thrips, and mites. Additionally, strawberries are not immune to diseases, and succumb to gray mold, leaf spot, rhizopus rot, leaf blight, verticillium wilt, red stele, black root rot, powdery mildew, nematodes, and slime molds. A windy area can prevent a fungus from growing.
In addition to being easy to cultivate, strawberries are also very nutritious fruit. They are a great source of flavonoids and vitamin C, and have few calories. Strawberries are an excellent source of fiber, potassium, and calcium. They also have beauty benefits; it is rumored that rubbing raw strawberries over your teeth will actually whiten them!
Sadly, some people are allergic to strawberries. The most common allergy is through oral consumption, but may also occur in the form of hives or breathing problems. For those with the allergy, white-fruited strawberries may be the answer. They lack the protein necessary for normal ripening, and so do not turn red. They are almost completely allergen-free!
Hopefully, everyone, even those with allergies, enjoy strawberries when they can. They are delicious, nutritious, and employ benefits for the body, both inside and out.
Google Announces First Quarter 2011 Results
In May 2011, in connection with a potential resolution of an investigation by the United States Department of Justice into the use of Google advertising by certain advertisers, we accrued $500 million for the three month period ended March 31, 2011. Although we cannot predict the ultimate outcome of this matter, we believe it will not have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows.
More Details
As a result, we have updated the affected financial data in this release, as noted, as well as the accompanying financial tables.
MOUNTAIN VIEW, Calif. – April 14, 2011 – Google Inc. (NASDAQ: GOOG) today announced financial results for the quarter ended March 31, 2011.
“We had a great quarter with 27% year-over-year revenue growth,” said Patrick Pichette, CFO of Google. “These results demonstrate the value of search and search ads to our users and customers, as well as the extraordinary potential of areas like display and mobile. It's clear that our past investments have been crucial to our success today—which is why we continue to invest for the long term.”
Q1 Financial Summary
Google reported revenues of $8.58 billion for the quarter ended March 31, 2011, an increase of 27% compared to the first quarter of 2010. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the first quarter of 2011, TAC totaled $2.04 billion, or 25% of advertising revenues.
Google reports operating income, operating margin, net income, and earnings per share (EPS) on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures in the accompanying financial tables.
- GAAP operating income in the first quarter of 2011 was $2.30 billion, or 27% of revenues [updated from $2.80 billion, or 33% of revenues]. This compares to GAAP operating income of $2.49 billion, or 37% of revenues, in the first quarter of 2010. Non-GAAP operating income in the first quarter of 2011 was $3.23 billion, or 38% of revenues. This compares to non-GAAP operating income of $2.78 billion, or 41% of revenues, in the first quarter of 2010.
- GAAP net income in the first quarter of 2011 was $1.80 billion [updated from $2.30 billion], compared to $1.96 billion in the first quarter of 2010. Non-GAAP net income in the first quarter of 2011 was $2.64 billion, compared to $2.18 billion in the first quarter of 2010.
- GAAP EPS in the first quarter of 2011 was $5.51 [updated from $7.04] on 326 million diluted shares outstanding, compared to $6.06 in the first quarter of 2010 on 323 million diluted shares outstanding. Non-GAAP EPS in the first quarter of 2011 was $8.08, compared to $6.76 in the first quarter of 2010.
- Non-GAAP operating income and non-GAAP operating margin exclude the expenses related to stock-based compensation (SBC), and in the first quarter of 2011, the charge related to potential resolution of Department of Justice investigation. Non-GAAP net income and non-GAAP EPS exclude the expenses related to SBC and the charge related to potential resolution of Department of Justice investigation, and the related tax benefits. In the first quarter of 2011, the charge related to SBC was $432 million, compared to $291 million in the first quarter of 2010. The tax benefit related to SBC was $92 million in the first quarter of 2011 and $65 million in the first quarter of 2010. The charge related to potential resolution of Department of Justice investigation was $500 million. We recognized no tax benefit for the charge related to potential resolution of Department of Justice investigation.
Q1 Financial Highlights
Revenues – Google reported revenues of $8.58 billion in the first quarter of 2011, representing a 27% increase over first quarter 2010 revenues of $6.77 billion. Google reports its revenues, consistent with GAAP, on a gross basis without deducting TAC.
Google Sites Revenues – Google-owned sites generated revenues of $5.88 billion, or 69% of total revenues, in the first quarter of 2011. This represents a 32% increase over first quarter 2010 revenues of $4.44 billion.
Google Network Revenues – Google’s partner sites generated revenues, through AdSense programs, of $2.43 billion, or 28% of total revenues, in the first quarter of 2011. This represents a 19% increase from first quarter 2010 network revenues of $2.04 billion.
International Revenues – Revenues from outside of the United States totaled $4.57 billion, representing 53% of total revenues in the first quarter of 2011, compared to 52% in the fourth quarter of 2010 and 53% in the first quarter of 2010. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the fourth quarter of 2010 through the first quarter of 2011, our revenues in the first quarter of 2011 would have been $19 million lower. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the first quarter of 2010 through the first quarter of 2011, our revenues in the first quarter of 2011 would have been $23 million lower.
- Revenues from the United Kingdom totaled $969 million, representing 11% of revenues in the first quarter of 2011, compared to 13% in the first quarter of 2010.
- In the first quarter of 2011, we recognized a benefit of $14 million to revenues through our foreign exchange risk management program, compared to a benefit of $10 million in the first quarter of 2010.
Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 18% over the first quarter of 2010 and increased approximately 4% over the fourth quarter of 2010.
Cost-Per-Click – Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 8% over the first quarter of 2010 and decreased approximately 1% over the fourth quarter of 2010.
TAC – Traffic Acquisition Costs, the portion of revenues shared with Google’s partners, increased to $2.04 billion in the first quarter of 2011, compared to TAC of $1.71 billion in the first quarter of 2010. TAC as a percentage of advertising revenues was 25% in the first quarter of 2011, compared to 26% in the first quarter of 2010.
The majority of TAC is related to amounts ultimately paid to our AdSense partners, which totaled $1.70 billion in the first quarter of 2011. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $337 million in the first quarter of 2011.
Other Cost of Revenues – Other cost of revenues, which is comprised primarily of data center operational expenses, amortization of intangible assets, content acquisition costs as well as credit card processing charges, increased to $897 million, or 10% of revenues, in the first quarter of 2011, compared to $741 million, or 11% of revenues, in the first quarter of 2010.
Operating Expenses – Operating expenses, other than cost of revenues, were $3.34 billion [updated from $2.84 billion] in the first quarter of 2011, or 39% of revenues [updated from 33% of revenues], compared to $1.84 billion in the first quarter of 2010, or 27% of revenues.
SBC – In the first quarter of 2011, the total charge related to SBC was $432 million, compared to $291 million in the first quarter of 2010.
We currently estimate SBC charges for grants to employees prior to April 1, 2011 to be approximately $1.7 billion for 2011. This estimate does not include expenses to be recognized related to employee stock awards that are granted after March 31, 2011 or non-employee stock awards that have been or may be granted.
Operating Income – – GAAP operating income in the first quarter of 2011 was $2.30 billion, or 27% of revenues [updated from $2.80 billion, or 33% of revenues]. This compares to GAAP operating income of $2.49 billion, or 37% of revenues, in the first quarter of 2010. Non-GAAP operating income in the first quarter of 2011 was $3.23 billion, or 38% of revenues. This compares to non-GAAP operating income of $2.78 billion, or 41% of revenues, in the first quarter of 2010.
Interest and Other Income, Net – Interest and other income, net increased to $96 million in the first quarter of 2011, compared to $18 million in the first quarter of 2010.
Income Taxes – Our effective tax rate was 25% [updated from 21%] for the first quarter of 2011.
Net Income – GAAP net income in the first quarter of 2011 was $1.80 billion [updated from $2.30 billion], compared to $1.96 billion in the first quarter of 2010. Non-GAAP net income in the first quarter of 2011was $2.64 billion, compared to $2.18 billion in the first quarter of 2010. GAAP EPS in the first quarter of 2011 was $5.51 [updated from $7.04] on 326 million diluted shares outstanding, compared to $6.06 in the first quarter of 2010 on 323 million diluted shares outstanding. Non-GAAP EPS in the first quarter of 2011 was $8.08, compared to $6.76 in the first quarter of 2010.
Cash Flow and Capital Expenditures – Net cash provided by operating activities in the first quarter of 2011 totaled $3.17 billion, compared to $2.58 billion in the first quarter of 2010. In the first quarter of 2011, capital expenditures were $890 million, the majority of which was related to IT infrastructure investments, including data centers, servers, and networking equipment. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the first quarter of 2011, free cash flow was $2.28 billion.
We expect to continue to make significant capital expenditures.
A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.
Cash – As of March 31, 2011, cash, cash equivalents, and marketable securities were $36.7 billion.
Headcount – On a worldwide basis, Google employed 26,316 full-time employees as of March 31, 2011, up from 24,400 full-time employees as of December 31, 2010.
WEBCAST AND CONFERENCE CALL INFORMATION
A live audio webcast of Google’s first quarter 2011 earnings release call will be available at http://investor.google.com/webcast.html. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, the financial tables, as well as other supplemental information including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, are also available on that site.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that involve risks and uncertainties. These statements include statements regarding our plans to invest heavily in innovation, our expected stock-based compensation charges, our plans to make significant capital expenditures, and our potential resolution of a Department of Justice investigation. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, unforeseen changes in our hiring patterns and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2010, which is on file with the SEC, and is available on our investor relations website at investor.google.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, which we expect to file with the SEC in May 2011. All information provided in this release and in the attachments is as of April 14, 2011, and Google undertakes no duty to update this information.
ABOUT NON-GAAP FINANCIAL MEASURES
To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP EPS, and free cash flow. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures" and "Reconciliation from net cash provided by operating activities to free cash flow" included at the end of this release.
We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our "recurring core business operating results," meaning our operating performance excluding not only non-cash charges, such as stock-based compensation, but also discrete cash charges that are infrequent in nature, such as the charge related to potential resolution of Department of Justice investigation incurred as of March 31, 2011. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income plus stock-based compensation and the charge related to potential resolution of Department of Justice investigation. Non-GAAP operating margin is defined as non-GAAP operating income divided by revenues. Google considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of stock-based compensation and one-time eventsso that Google's management and investors can compare Google's recurring core business operating results over multiple periods. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under ASC Topic 718, Google's management believes that providing a non-GAAP financial measure that excludes stock-based compensation allows investors to make meaningful comparisons between Google's recurring core business operating results and those of other companies, as well as providing Google's management with an important tool for financial and operational decision making and for evaluating Google's own recurring core business operating results over different periods of time. There are a number of limitations related to the use of non-GAAP operating income versus operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes some costs, namely, stock-based compensation, that are recurring. Stock-based compensation has been and will continue to be for the foreseeable future a significant recurring expense in Google's business. Second, stock-based compensation is an important part of our employees' compensation and impacts their performance. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that our peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.
Non-GAAP net income and EPS. We define non-GAAP net income as net income plus stock-based compensation, plus the charge related to potential resolution of Department of Justice investigation, less the related tax effects. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis. We consider these non-GAAP financial measures to be a useful metric for management and investors for the same reasons that Google uses non-GAAP operating income and non-GAAP operating margin. However, in order to provide a complete picture of our recurring core business operating results, we exclude from non-GAAP net income and non-GAAP EPS the tax effects associated with stock-based compensation and the charge related to potential resolution of Department of Justice investigation. Without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on our operating results. The same limitations described above regarding Google's use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP EPS. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS together with net income and EPS calculated in accordance with GAAP.
Free cash flow. We define free cash flow as net cash provided by operating activities minus capital expenditures. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, including information technology infrastructure and land and buildings, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and strengthening the balance sheet. Analysis of free cash flow also facilitates management's comparisons of our operating results to competitors' operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Google is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period because it excludes cash used for capital expenditures during the period. Our management compensates for this limitation by providing information about our capital expenditures on the face of the cash flow statement and under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Google has computed free cash flow using the same consistent method from quarter to quarter and year to year.
The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.
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