Monday, January 18, 2010

Google Inc. (NASDAQ: GOOG): Q4 Earnings Preview 2009

. Monday, January 18, 2010

By Stock Wizard

Online search giant Google Inc. (NASDAQ: GOOG) is scheduled to release financial results for the fourth quarter after the market close on Thursday, January 21, 2010. Analysts, on average, expect the company to report earnings of $6.43 per share on revenue of $4.89 billion. In the year ago quarter, the company reported earnings of $5.10 per share on revenue of $4.22 billion.

Google Inc., a technology company, maintains index of Websites and other online content for users, advertisers, Google network members, and other content providers. Its automated search technology helps users to obtain instant access to relevant information from its online index.

In October, the internet and search engine giant said that its third quarter profit increased from last year, driven predominantly by higher advertising revenues. The Mountain View, California-based company reported net income of $1.64 billion or $5.13 per share for the third quarter, up from $1.29 billion or $4.06 per share in the prior year quarter.On a non-GAAP basis, net income rose to $1.88 billion or $5.89 per share from $1.56 billion or $4.92 per share in the third quarter of 2008. Third quarter gross revenues increased 7% to $5.94 billion from $5.54 billion in the same quarter of last year. Excluding Traffic Acquisition Costs, revenues for the quarter rose 8% to $4.38 billion from $4.04 billion a year earlier. Analysts, on average, expected the company to report earnings of $5.42 per share on revenue of $4.24 billion.

The company has been the undisputed leader in search engine for several quarters now. According to data published by Internet data tracking firm comScore, Google sites accounted for 65.7% search market share in December 2009, up from 65.6% the previous month.

Early this month, Google unveiled its much anticipated smartphone "Nexus One" to expand its reach from the PC to the mobile world and ensure its online products and ads get prominent placement on a new breed of wireless Internet devices. The device will feature a 3.7-inch (9.4 centimeter) touchscreen display and will run the 2.1 version of the Android operating system and feature OLED display technology, a trackball for user interface control, an accelerometer chip, and a 5 megapixel camera.

In January, Google Inc. that it may quit China, the world's biggest Internet market by users, after hackers apparently looking for information on human-rights activists broke into its China site. According to media reports, the company is planning to hold discussions with the Chinese government during the next few weeks.

For Google, fourth quarter was a busy one on the acquisition front. In November, the online giant agreed to acquire mobile display and technology provider, AdMob for $750 million in stock. AdMob, a technology start-up, creates technology to display advertisements on mobile phones and track advertisements. The acquisition is expected to enhance Google's existing expertise and technology in mobile advertising, besides providing advertisers and publishers more choice in the new, growing area. Also in November, Google confirmed that it had acquired Gizmo5, a company that offers voice-over-IP software for mobile phones and computers. Gizmo's service is similar to Skype's in that it lets users to make low-cost or free calls using a software client on their computers. The firm also announced the acquisition of Teracent, a startup that helps advertisers reformat ads based on geography, language, and other factors in real time. Google also acquired AppJet, the startup behind EtherPad, a real-time collaborative word processor, for an undisclosed amount.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 21.91 and PEG ratio (5 yr expected) of 1.19. In terms of stock performance, Google shares have gained nearly 98% over the past year.

Full Disclosure: None.

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