Google is scheduled to announce second quarter earnings on Thursday afternoon, and Citi analyst Mark Mahaney just sent out the handy cheat sheet above showing consensus estimates, as well as his own. The Street is looking for $4.05 billion in net revenues, Mahaney is predicting $3.97 billion. Anything above $4.05 billion would be viewed as positive, and anything below Mahaney’s estimate would be viewed as negative. Similarly, the Street consensus on non-GAAP EPS (earnings per share) is $5.05, while Mahaney thinks it will be 20 cents lower ($4.85). Anything between the two extremes would be viewed as neutral, according to his cheat sheet.
Mahaney is somewhat bearish compared to the consensus view, perhaps because of the continued economic difficulties and the deep funk the advertising industry is in. He expects revenues to increase only 2 percent on an annual basis, and to decline 3 percent on a quarterly basis. (Last quarter was the first time Google ever reported a sequential drop in revenues). His EPS estimate is only 5 percent higher than Google’s second quarter earnings a year ago, and 6 percent less than last quarter’s.
The cheat sheet also goes into how to evaluate Google’s key financial metrics, such as paid click revenue growth and average cost per click. Anything less than 13 percent paid click growth should be viewed as negative, anything above 16 percent as positive, and anything in between as neutral. He is modeling 13 percent growth. However, he expects the average cost per click to decline by more than 13 percent to $0.42.
Google can make its numbers if need be by tamping down discretionary capital expenditures, so keep an eye on that number as well. Anything above $500 million in CapEx wlil be seen as wasteful, anything below $300 million as frugal.
Will Google blow these estimates out of the water, or will it just keep treading?
This is great! Good work
I think the kudos goes to Mark Mahaney. This stuff is normally reserved for institutional clients only and do not allow for reproduction …
Erick – Do you own any goog stock?
I wished I bought some on their IPO a few years ago.
hmmmm…. accurate or not??
Eric, source link pls?
This stuff is normally reserved for institutional clients only and do not allow for reproduction………..
I have known Mark for sometime and with Google he is pretty close….except with that ComScore mess two quarters ago. Also – he is at every search related conference and easy to approach if you should want to have a good conversation about companies he follows.
Reducing CAPEX wont help you with your P&L numbers. That will flow into the P&L in subsequent periods.
These are great stats, thanks. What else does the market know that we don’t? The share price has leapt $20 since Friday [$402 to $424 at last night's bell] on expectation of these earnings, so could they be ahead of target?
I am a nobody but I think these analysts are just guessing when it comes to a business like Google. Look it is not hard to take the consensus estimate, which is based on what? And set your estimate a little lower because of “overall market conditions”. Consider for a moment that Google, with its historical growth rate, the ongoing growth of the internet, and the shift the slow but broad shift in thinking about where ad spend it most effective, and its new platforms for advertising (cellphones, youtube) that perhaps, just perhaps, the weak economy might already be built into Google’s PE. Furthermore, last quarter, the worst quarter on record, I believe Google’s perf. was additionally masked by some one time charges and it still wasn’t bad. Me, nobody, predicts that Google destroys these estimates. But alas I don’t get paid to do this job.
Guess you were wrong, huh?