Wall Street consensus is that Google (NASDAQ:GOOG) is expected to announce revenue of $8.38 billion on earnings per share of $10.46 for the fourth quarter.
Yet some financial analysts are modeling for better results based on the company's newer search enhancements and improvements to YouTube advertising.
Specifically, Google's "Panda" algorithm change, Instant predictive search technology and Places local search service could buoy the company's Q4 and fiscal year 2011 results, Global Equities Research analyst Trip Chowdry wrote in a research note Jan. 5.
Chowdry, who had previously modeled Google to rake in $8.23 billion in sales excluding traffic acquisition costs and $10.57 EPS, now expects Google's Q4 sales to be $8.45 billion on EPS of $10.49. For fiscal year 2011, he is calling for revenue of $29.42 billion and EPS of $37.05, from $29.19 billion on EPS of $37.13.
How did Chowdry arrive at his increases? Bullishness in the social media and search industry.
After speaking to some 60 search marketers, he concluded the Panda algorithm and ranking change to tamp down content farms and low-quality Websites is providing more relevant search results than ever. This in turn is attracting more advertisers and higher click-through rates, leading to increased search revenues.
Google's search query share has certainly prospered, as the company closed out 2011 with 66 percent search market share, according to comScore.
Chowdry attributed this growth largely to the Google Instant Preview search software, which surfaces results and previews them without requiring users to click through every time. Google has said this acceleration prompts users to conduct more searches.
As for YouTube, Chowdry said Google's new TrueView ad format is pushing YouTube monetization in a way never seen before.
TrueView plays a video ad for 5 seconds, then allows users to skip the rest of it, with the advertiser making money if users watch the full ad. Marketers have said this pricing model has been five times as effective as other video ad formats.
Chowdry expects YouTube's display ad sales to rise between 7 percent to 19 percent for the quarter. Overall, he's modeling Google's 2012 revenue excluding TAC of $38.48 billion and EPS to $49.90, a year-over-year increase of 30.8 percent and 34.7 percent, respectively.
Piper Jaffray analyst Gene Munster, meanwhile, is less sanguine about Google's present future, for which he believes the company's results in Europe could be a wild card. He also believes the company's stock could fade due to uncertainty over Google's acquisition of Motorola Mobility (NYSE:MMI).
Google agreed to pay $12.5 billion in cash and stock for the Android smartphone and tablet maker, a move Google CEO Larry Page made to acquire patents to fend off mounting litigation in the mobile sector.
Given the heat Google is getting from federal regulators over its search practices, there's no guarantee the Justice Department will approve the merger.
Munster believes the acquisition, should it come to fruition, will denigrate Google's operating margins for 2012, dropping them from 46 percent to the low 30 percent range for the year.
Though one of the top Android OEMs in the world, Motorola has struggled of late, announcing both financial and smartphone shipment shortfalls in the last two quarters.
Munster said the latest shortfall preannouncement, issued last week, will make investors wonder whether or not Google will digest Motorola's thousands of patents and jettison the operating business.