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GOOG Down With Tech
Stocks are under early pressure as jobless claims unexpectedly increase. The selling effort is relatively broad based, but tech stocks and financial plays hit the hardest. Shares of Google are off a half a per cent ahead of tonight’s earnings release. Upcoming catalysts include first quarter 2011 financial results released tonight at 4:30 p.m. Eastern Time; continued Android momentum; regaining ground in China and pushing into other emerging markets; updated software, adoption and media partners for Google TV; and progress in other newer initiatives (+1, location-based services, mapping, gaming, etc.). The stock trades at approximately 14x Enterprise Value / EBIT, inexpensive relative to historical trading levels and the broader Internet group.
LIVE: Join Silicon Alley Insider For Google Earnings Tonight (Business Insider)
Results released after the close. Conference call starts at 4:30pm Eastern Time.
Wall Street First Quarter Earnings Preview: $6.32 Billion Revenue, EPS Of $8.13 (Various)
The analysts weigh in:
- Jeetil Patel at Deutsche Bank: He believes first quarter results are likely to be better than expectations (yet he’s below the Street) and he remains a buyer of the stock. Because of ad strength as well as as well as a weaker U.S. dollar, he believes there is potential for revenue upside to his 27% year-over-year, 1% quarter-over-quarter net revenue growth. Strength in e-commerce activity should bode well for paid search spend, while higher CPC categories continue to show signs of improvement. He is looking for net revenues of $6.43 billion and EPS of $7.83 (conservative for OPEX re-investment).
- Brian Pitz at UBS: He reiterates his Buy rating and $780 price target. Brian remains positive on monetization momentum in the first quarter, particularly in newer ad formats. At just 13x 2011E EPS and 11x 2012E EPS (ex-cash), Google remains one of the most inexpensive large cap names in the tech sector.
- Steve Weinstein at Pacific Crest: He says that industry checks point to strong momentum with U.S. search spending accelerating in the first quarter to the middle teens from low-double-digit growth last quarter. Investors should expect net revenue to grow roughly 2% sequentially, to between $6.48 billion and $6.52 billion.
- Justin Post at BofA Merrill Lynch: Justin says that Google will post a strong quarter but don’t expect any big surprises. Most likely upside for the first quarter would be stable paid click growth, an acceleration in CPCs driven by eCommerce ad quality improvements and currency, plus modest upside from the display and mobile revenue ramp. Downside would be unexpected weakness in International results, slowdown in retail and travel spending growth, and OPEX growth. Justin is looking for net revenue of $6.43 billion and EPS of $8.08.
YouTube Needs To Figure It Out (The Motley Fool)
If traditional broadcast, satellite, and cable TV stands for real-time news and entertainment, including sporting events, and Netflix provides a huge catalogue of long-form, prerecorded media, then YouTube becomes the discount bin at the megamart. YouTube hopes to enable live streams for “thousands of partners” in coming months. Maybe Google can work out the kinks in the format, encourage its content providers to keep archival copies of stuff like keynotes for later perusal, and curate the new flood of user-generated streams in some way.
Internet Ad Revenues Reached $26 Billion In 2010, Search Half Of That (TechCrunch)
IAB released U.S. Internet advertising revenue figures and sales jumped 15% to $26 billion in 2010, setting a record high. Search still made up 46% of that total, followed by display ads at 38%. But display advertising grew twice as fast as search (24% growth versus 12%). Video advertising (part of display) now makes up 5% of the total and jumped 40% to $1.4 billion. This was also the first year that the IAB is estimating mobile display advertising revenue between $550 million and $650 million. Internet advertising surpassed newspaper ads in the U.S. last year ($22.8 billion) and is now second only to TV ($28.6 billion).
Search Marketing To Grow 16% This Year (Mashable)
Search marketing is estimated to grow 16% this year to $19.3 billion and 74% of North American ad agencies say their clients use Facebook, according to Search Engine Marketing. Agencies say 34% of their clients’ paid-search budget is now spent on local paid-search advertising, compared with 54% for national PPC campaigns, and 12% for international. 79% of companies call mobile marketing “highly significant” or “significant” to their strategy, up from 14% in 2010.
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