| Tech Stock News and Analysis |
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| Tuesday, October 17, 2006 |
Google Inc. reports earnings for the fiscal third quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: The Mountain View, Calif.-based company remained head and shoulders above its nearest competitor for U.S. search queries. In August, Google captured 44.1 percent of searches, while the No. 2 player, Yahoo Inc., trailed with 28.7 percent, according to data from comScore qSearch.
August was a busy month for deals.
The company inked an agreement to provide search for News Corp.'s Fox Interactive Media Web sites, which include the popular social hangout, MySpace.com. Google will send at least $900 million in advertising revenue to the media conglomerate over three years in exchange for the right to sell advertising on the sites.
Google signed on to provide text advertising on eBay sites outside the U.S., and joined forces with eBay and its Skype Voice over Internet Protocol technology to develop click-to-call advertising.
The search leader also signed a distribution deal with Viacom Inc. to distribute MTV Networks video clips over its advertiser network, as well as to sell some for $1.99 on Google Video.
BY THE NUMBERS: Google doesn't issue regular guidance, but analysts polled by Thomson Financial expect earnings of $2.42 per share on $1.81 billion in revenue.
ANALYST TAKE: In an Oct. 8 note to investors, Citigroup analyst Mark Mahaney wrote that Yahoo Inc.'s announcement that weakness in automotive and financial services advertising would weigh down third-quarter results was "the biggest intra-quarter development for Google."
The analyst wrote, "Our call is that Google has most likely been insulated from this weakness," as it has fewer sites devoted to those areas than Yahoo. Manahey also noted that Google relies more on search ads and less on display ads, and takes a higher percentage of revenue from international business compared with Yahoo.
Mahaney wrote that he expects Google to post results in line with expectations.
Jeffries analyst Youssef Squali wrote in an Oct. 12 note to investors that he expects Google to post solid third-quarter earnings, driven by incremental market share gains in search. The analyst added that he expects Google to report increased revenue from its own sites and its network of advertisers, for total gross advertising revenue of $2.65 billion.
Lehman Brothers analyst Douglas Anmuth wrote in an Oct. 5 investor note that he expects Google to meet or beat estimates, but that while the company undoubtedly improved in the quarter, it faces tough year-over-year comparisons.
STOCK PERFORMANCE: Shares of Google fell 4.2 percent during the quarter, ending September at $401.90 on the Nasdaq. In the past 52 weeks, the company's stock has traded between $294.56 and $475.11. |
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