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One of the market's biggest criticisms of Google (NASDAQ: GOOG) is that it offers a large number of products that don't make the company money. To make matters worse, some of these offerings will probably never bring in a dime and that is a big drag on Google's margins.
The days of Google supporting odd projects that have no financial future may be over. Perhaps the recession has brought those times to an end, or it may be that the ability to keep track of dozens of unrelated engineering projects has become a burden to the firm's management. How many of these programs Google cuts will be a sign of how serious the company is about keeping its profits as high as possible.
According to The New York Times, Google has moved toward a system of evaluating which projects are folded based on whether "they had difficulty attracting Google employees to develop them; they didn't solve a big enough problem; or they failed to achieve internal performance targets known as 'objectives and key results.'"
Those standards still sound vague if Google does not want to waste money and engineering resource.
There are a few products investors should watch to see if Google is really cutting costs, a move that will be cheered by shareholders who have watched the search company's price collapse.Google Earth is very popular, but it must be expensive to develop and seems to have no path to making money. The same is true with the company's social network, Orkut. Google Check-Out may be a good way to make money on e-commerce, but it has next to no market share compared to industry leader PayPal.
When Google begins to kill some of its high-profile projects that have no future for bringing in meaningful sales, it will be sign that the company is really serious about costs.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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