Google will report its first-quarter earnings after market close April 15. Analysts expect the company to report $6.57 in earnings per share on sales of $4.93 billion, up from $5.16 EPS on $4.1 billion in revenue in the first quarter of 2009. Although Google retained a 65 percent search market share in March, its future outlook is less clear, given pressure from governments and rivals such as Apple, Facebook and Microsoft. This gives investors reason to be cautious.
Industry analysts expect a strong first quarter from Internet bellwether
Google despite government challenges in the United
States and abroad and competition from Apple
Google will report first-quarter earnings after the market closes April 15.
Analysts polled by Thomson Reuters said they believe Google will report $6.57
in earnings per share on sales of $4.93 billion, up from the $5.16 EPS on $4.1
billion in revenue the company recorded in the first quarter of 2009.
Broadpoint AmTech analyst Ben Schachter has increased his first-quarter EPS
estimate from $6.62 to $6.71, citing the rebound in the economy and the
subsequent positive impact on cost-per-clicks and monetization boosts from new
product listing ads and site-link ads.
Jefferies and Co. analyst Youssef Squali said he expects Google to post net
revenue of $4.93 billion and EPS of $6.60. Echoing Schachter, Squali said
Google's growth in query volume and emerging product ads, site links and image
ads could lead to a positive surprise in paid click growth. Squali said he expects
Google's paid click growth to be 12 percent year over year.
Moreover, Squali noted that with query volume growing 14 percent year over
year in the first quarter, Google grew faster in core search than the market,
which grew 10 percent for the latest quarter.
Google also retained 65 percent search market share
March despite a strong showing from Microsoft's Bing search service, according
to ComScore. Bing's share of the market has grown from 8 percent in May 2009 to
11.7 percent in March 2010.
All of these results are encouraging in the short term, but Google's future
outlook is less clear. Google faces a lot of pressures from governments and
rivals that give investors cause to be skittish.
In the United States,
the Department of Justice has been a key obstacle to the Google Book Search
settlement to scan books and
sale them online. Amazon.com with its Kindle and other e-reader vendors
continue to sell access to digital books, expanding their lead in the market.
The Federal Trade Commission has held up Google's proposed $750 million acquisition
of mobile ad
This acquisition would give Google access to a large quantity of data around
ads that run on applications for Apple's iPhone, and could help Google tailor
ads for smartphones running its own Android operating system, which is now the No. 4 smartphone platform
in the United
Apple used the FTC's laborious investigation to its advantage, unveiling the iAd
in-application advertising platform for the
iPhone April 8.
Difficulties with governments abroad haunt Google as well. Search rivals and
other Internet companies in Europe complained to the European Commission
accusing Google of
anticompetitive practices, which the Commission takes very seriously and is
In response to a cyber-attack
on its users' Gmail accounts, Google ran afoul of
the Chinese government by ceasing to censor search results there, shuttering its Google.cn site
and porting users to
Google also faces pressure from Microsoft, which is expected to challenge
Google Apps in the area of cloud collaboration with Office 2010 in May, and Facebook, which saw a 48 percent increase
in its search
queries in March.
The social network's more than 400 million Internet users continue to spend
more time on the Website, which means they are spending a little less time
searching via Google.
During the first-quarter earnings conference call tomorrow, eWEEK expects
financial analysts to pepper Google CEO Eric
Schmidt and his fellow executives with questions about making money beyond
desktop search. Analysts will inquire about ad sales on YouTube and enterprise
sales of Google Apps, but especially sales of the Google Nexus One and the
company's plans to bring that phone to other carriers beside T-Mobile.