Google is expected to announce earnings of $6.31 billion on earnings per share of $8.14 April 14, as the company moves forward under new CEO Larry Page's command.
Google is expected to announce earnings of $6.31 billion
and earnings per share of $8.13 when it reports first quarter earnings April 14,
10 days after Larry Page began his second stint as CEO at the search engine.
Jefferies and Co. analyst Youssef Squali said he expects
Google to meet or slightly beat expectations, thanks to strength in pricing,
international business and display advertising.
Squali, who sees Google wielding 70 percent to 75 percent
of overall search ad budgets in North America and 90 percent overseas, is
calling for Google to report earnings of $6.32 billion on EPS of $8.11.
He also anticipates a 15 percent bump in paid clicks and
8 percent boost in cost-per-clicks, which is the basis for his expectations
that Google's year-to-year revenues will grow 25 percent. Google's posted Q1
2010 earnings excluding items of $6.76 a share, and $5 billion in net revenue.
Global Equities Research analyst Trip Chowdry also noted
that Google's search market share is stable, and that both its query volume and
CPC volume are up, as electronic marketers are still allocating 88 percent to
90 percent of their budgets to Google and the remaining to Microsoft Bing.
Chowdry also noted YouTube had another quarter of strong
showing, with homepage masthead and homepage expandable masthead ad formats sold
out for the next 6 to 8 months.
Chowdry, who expects Google to report net revenues of
$6.4 million and EPS of $8.19 this Thursday, tempered this bullishness with a
caveat looking forward.
He argued that if the U.S. government passes its proposed
Do Not Track regulation, Google could see a hit to its YouTube ad traffic as
it uses re-marketing to redirect a user from search to YouTube. This is what drives
YouTube video as revenues.
"If the government passes Do Not Track me regulation, it is possible that then Google may not be able to re-market
YouTube to search query users, which then may impact YouTube monetization,"
Squali also curbed his enthusiasm, albeit for different reasons.
He noted Page's new post as CEO and the persistent regulatory scrutiny Google
is facing lend uncertainty to the mix for investors.
Page reorganized his senior management team April 7, promoting high-level
executives to head business lines and report directly to him.
He also tethered employees' bonuses to the success or
failure of Google's evolving social strategy, which is designed to catch some
of the fire Facebook has enjoyed to date. The moves could "alienate
many," Squali noted.
"While potentially positive, this reorg brings
strategic and execution uncertainty, at a time of ever increasing competition
from Facebook and others," Squali wrote in an April 8 research note.
Page and his team also must deal with regulators both in
EU and US. The
European Commission and Texas state Attorney General are looking at Google's search and ad practices. The
DOJ just cleared Google's $700 million bid for travel software maker ITA, albeit with stringent
conditions to temper antitrust concerns.
Short term, neither the leadership nor the regulatory scrutiny
should impact Google, but they do pose serious ramifications for the company's
growth and profitability over time, the analyst said.