Well, today's the big day. Hope you got your chips & salsa, chicken wings and beer. It's Google earnings day. The entire market may take its cue from Google, despite the fact that Google's earnings only reflect one company. Actually, that's not true at all. Google's earnings affect thousands of other companies, whose entire business model depends on turning Adsense into gold, though at the moment none of these are public. Yes, Google's always been counted as a savior. During the recession, they were the only company hiring in Silicon Valley, and the only one buying Segways from Dean Kamen. Now they're going into China, risking their reputation, just to help the US reverse its trade deficit. Wow, what selflessness. (Update: And let's not forget mutual fund manager Bill Miller, whose Legg Mason Value Trust continued its S&P beating ways, only because of Google)
The market's turned nervous on Google lately, but if I had to make a prediction, I'd bet they come in pretty good. It's hard to imagine that ad prices/clicks weren't through-the-roof in q4, though "through the roof" is already expected.
Here's Jeff Matthews with a preview:
Depending on the analyst talking, Wall Street expects a minimum of 22% sequential growth (more than most growth companies experience year-over-year) and as much as 30% sequential growth (way more than most growth companies experience year-over-year). “Pro-forma” earnings should be at least $1.75 a share—and probably closer to $2.00 to satisfy the hoards.
I have no idea what the numbers will look like when Google reports after the close, but we have some clues that add up to strong numbers—particularly the fast growth in eBay marketing costs (eBay is Google’s largest user) and the continued ramp-up in online marketing spend described on many conference calls in the last two weeks.
Indeed, if the Alexa.com numbers are to be believed, Google usage has continued to grow substantially—significantly outpacing Yahoo!
You can see this yourself: go to Alexa.com’s “Traffic Rankings” page, type in “google.com” and then type “yahoo.com” into the “Compare Sites” function. You will see the Google blue line crossing the Yahoo red line—at least for internet users utilizing the Alexa.com toolbar.
Whatever the outcome tonight, I doubt there is much of a short-term “play” in Google stock, because short-term option volatility has soared to absurd levels and will almost certainly collapse the minute the press release hits the tape.
I’d be willing only to bet that Google put buyers and Google call owners see little profit, unless Google management misses huge or beats very large.
We'll be back on it after the bell, if there's anything worth talking about.
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