Thomson Reuters analysts expect Google to post $6.45 per share and $4.9 billion in sales on the strength of a strong holiday shopping season, which the search engine was able to capitalize on by driving ad spending forward during the recession. Key to this was the 2009 e-commerce shopping season, for which research firms such as comScore said e-commerce sales totaled $29.1 billion, a 4-percent increase versus the same period last year. Google will host its earnings call after it reports Q4 earnings today.
Google faces high expectations for its fourth quarter
earnings Jan. 21, as the consensus among Thomson Reuters analysts pegs the
search engine to post $6.45 per share and $4.9 billion in sales on the strength
of a strong holiday shopping season.
So confident are financial analysts in Google's Q4
performance that Piper Jaffray analyst Gene Munster believes the consensus
could be shorting Google, whose paid click data suggest the company could earn $6.57
per share on sales of $5.01 billion.
Munster wrote in a Jan. 20 research note that the final
month of third-party paid click data indicates Google's Q4 U.S. paid clicks
ended up 16 percent quarter-over-quarter, suggesting Google will post earnings 2
percent ahead of Wall Street estimates.
His firm is maintaining its overweight rating and $700
price target for the leading search engine, which
continues to grow U.S. search
share versus Microsoft Bing and the fading Yahoo.
BroadPoint Amtech's Benjamin Schachter meanwhile said he is increasing his Q4 revenue
sequential growth estimate to 14 percent from 12 percent, and the company's Q4 EPS
estimate to $6.92.
Even if Google merely meets Wall Street expectations, it
will add up to a sales growth of about 16 percent from the Q4 2009, when Google
earned $5.10 a share. Chalk up the growth to Google's driving ad spending
forward even as businesses held onto their wallets during the recession.
Key to this was the 2009 e-commerce shopping season, for
which research firms such as comScore
said e-commerce sales totaled $29.1 billion, a 4-percent increase versus the
same period last year.
Schachter noted that Google is getting high
click-through-rates and high average CPA because of large transactions for product
listing ads, image ads purchased on a cost-per-action basis. Also doing well
are product extension and sitelink ads, image ads purchased on a CPC basis that
provide multiple links to pages within an advertiser's Web site.
"These new ad formats significantly increase coverage/click-through-rates
on the SERP [search engine results pages] largely because advertising images and
additional CPC links cover a much higher percentage of a given SERP,"
Schachter explained. YouTube and DoubleClick display ads are also expected to
boost Google's Q4.
Google will host its earnings call after it reports Q4
earnings today. Mobile has been a hot topic for Google on earnings calls for
the past one-year-plus since smartphones based on Google's Android operating
system began hitting the market. Schachter said he expects "interest on
the call" on
Google's
Nexus One smartphone, which it began selling through its Webstore Jan. 5.
"We expect it will take several quarters before
mobile (either mobile search or sales of the Nexus One) will have a meaningful
impact on Google's financials, but already we believe investors are somewhat
concerned about the possible dilutive effect to margins of Google selling
hardware going forward," Schachter wrote.
Google can't bask in the glow of cheery Q4 earnings. The
company must contend with its strained relations with China, where it has
stopped censoring its Google.cn search site and is threatening to exit entirely
after a hack attack on Gmail accounts.
Though analysts say Google only earned $300 million in
revenues in China in 2009, the ceiling is high because the country has more
than 360 million Web users. Indeed, Google already
cancelled sales of Android-based phones in China, casting doubt on the
viability of Android there.
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