Why the next Google earnings report is not that important

By: ispeculatornew
Date posted: 04.14.2010 (5:00 am) | Write a Comment  (1 Comment)

      Post a Comment

Being a long term believer in a stock sometimes means that you perhaps have less short term belief. I wouldn’t say that I’m not optimistic about this week’s earnings report but rather that I do not put that much importance on the numbers that will be released Thursday. Google continues to show growth in many different segments of its business but remains unfocused on revenues in all units not named “search”.

Good strategy?

Judging their focus is debatable on both sides really but there is no doubt that it means Google is much more focused on its long term prospects than on any short term numbers. And if that’s the case, I believe we should do the same. Now of course I do not mean ignoring Thursday’s report but rather focusing on specific aspects of the reports and discussions, first off I’ll be looking mostly at market share growth and usage growth in terms of users than in terms of revenues or profits.

Conference call

Normally, for such a company, listening to conference call discussions would be the best way to acquire good knowledge but in Google’s case it is a lot more tricky. The company is well known for not giving out much information to investors and has done so from its start. That is fine of course but it makes things a lot more difficult when listening or reading transcripts from an earnings call. But there will be some info that will be useful in trying to figure out Google’s future moves and those will be the ones to look for.

So what will influence this quarter’s earnings?

As we had discussed, Google might not be a one trick pony but almost all revenues come from ads displayed on its search pages and those revenues will be determined mostly by the ad rates it will charge (assuming Google’s market share has remained more or less stable). Those rates are basically determined by the demand for internet advertising. I would expect the demand to be slightly up because of the growing economy and more offline budgets going online. But the change would be small.

So no breakthrough quarter for Google, but a solid result with much more growth to come in the medium to long term future… Do you guys agree?

If you liked this post, you can consider subscribing to our free newsletters here


1 Comment

  1. Comment by Zavi — April 20, 2010 @ 2:46 pm

    Long life to Google. But better not to rest on laurels because lots of competition!!! Despite China worries, Google has deliver solid results.

    23% increase in revenue which is great.
    38% increase in net profit which is great too.

    Google need to remain innovative and strong. We’ll see what happens on 2nd quarter.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.