Google Search Plot Bigger Than Ever Through Q4

Wall Street expects Google to post net revenue of $6.06 billion on earnings-per-share of $7.14. The search engine is firing on all cylinders, save the social Web.

Wall Street analysts expect Google to post net revenue of $6.06 billion on earnings-per-share of $7.14 when it reports fourth quarter earnings Jan. 20.

Those figures are a nice bump from the year-ago quarter, when Google revealed revenues of $4.95 billion on an EPS of $6.79. Google also notched a Q4 2009 profit of $1.97 billion.

Analysts vary in their opinions of where Google improved for the quarter and year. Caris & Company's Sandeep Aggarwal said paid search trends got healthier and Google's Instant predictive search technology is delivering higher cost-per-click for the search engine.

Google's core search ad health, which drives 97 percent of the company's annual revenues, is rarely in doubt. The company finished 2010 with 66.6 percent search share, comScore said.

Google gave analysts a window into its non-core search efforts last quarter, when it said its display ad business was operating at a $2.5 billion run-rate. Moreover, Google said its mobile search ad business was running at $1 billion for the year.

Thanks to this disclosure, it is clear to Aggarwal that Google's non-core search business is now material enough to move the needle, especially citing as contributors YouTube, display, and mobile Internet advertising on iPhones and Android handsets. Google is seeing 300,000 Android smartphone activations per day.

"While Facebook is emerging as new competition, and the Bing/Yahoo! combo is becoming stronger, we believe that Google remains the most compelling and scalable solution to capture user intent online [a marketing gold standard] and its monetization is second to none," Aggarwal said.

Forecasts on Google's 2010 numbers from IHS research bears this out. IHS analyst Vincent L??«tang is modeling Google's full-year search ads sales at $25.4 billion, up 20.2 percent, from $21.1 billion, in 2009.

Adding Google's 61 percent revenue growth in display ads thanks to YouTube and DoubleClick, along with the boost in mobile advertising from AdMob, L??«tang predicts Google's total revenues could reach $28.9 billion in 2010, up 22.5 percent from 2009.

Despite Bing, increased adoption at Facebook, and rising competitive obstacles in fast-growing regions including China, Russia and South Korea, Google "managed to outgrow the overall market," the analyst said.

He added that, with Bing now applying sponsored links on Facebook searches and integrating Facebook profile content results, that combination has grown into a much bigger threat to Google's search plot. Facebook was also the most visited Website for the year, and passed Google in that amount of time users spend there.

Google's failure in social is not for lack of trying. The Google Buzz social conversation service was a bust, and the company bought a handful of social software providers, the biggest of which was Slide.

Yet Google also failed to buy Groupon, which would have given the company a big stake in the evolving social e-commerce market.

"Social networking is the only major Internet trend where Google has failed to make its mark by either acquiring or developing strong products, despite semi-failed short-lived attempts," Letang said.

Still, despite its failings, Google's Q4 and fiscal year 2010 hold big promise thanks to its core search, display and mobile ad businesses. We'll know more after the bell today.