GOOGLE EARNINGS PREVIEW: Most People Now Expect A Miss

google eric schmidt larry page sergey brin

Photo: Reuters

Google reports Q2 earnings after the close. We’ll have live analysis starting at 4PM ET, so tune in to see how Google fared.Analysts have been slashing their estimates in the last few weeks. The primary culprit is changes in the foreign exchange rate, though the Nexus One failure also played a part. Google’s China mess isn’t helping things either.

Even with analysts slashing estimates, Mark Mahaney at Citi writes, “Based on extensive intra-quarter channel checks and our model sensitivity work, we believe Street Q2 EPS estimates could be at risk, in part because some Street estimates haven’t been adjusted for FX and reduced Nexus One revenue.”

The good news there is that expectations are very low.  So even if Google just meets consensus, the stock might go up.

Fundamentally, Google needs to find its next growth engine. The company says that’s display advertising, so we’ll be looking to hear about the growth in that business.

Key consensus numbers:

  • Q2 net revenue: $4.99 billion.
  • Non-GAAP Operating Income: $2.71 billion.
  • Non-GAAP EPS: $6.48.
  • Beyond these numbers, we’ll be curious if Google updates the Android sales. Most recently it said it was activating 160,000 phones daily.

Here’s a great snapshot of what to expect from Citi’s Mark Mahaney. (Click here or on image to enlarge.)


And here are more excellent Google charts from Mahaney to get you ready for the quarter →

Here's how Google's stock has fared after earnings.

Google's mobile search revenue opportunity is still pretty small.

YouTube analysis: Still a rounding error

Display is supposed to be the next big Google business--but it's also basically a rounding error

CPC analysis: Price per click still going up

Click prices dipped in the recession, but they're headed up again (for now)

FX impact is big this quarter--this is part of why analysts have cut estimates

The first down quarter for international revenue?

Mahaney's more pessimistic (realistic?) than the Street.

This is from UBS: Paid click growth X price per click drive ad revenue

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at