Google's Burden Grows Heavier

Among investors' concerns is "a worry the company's management will say something unfriendly to investors," says Rohan. "If the growth in net revenues is 9% sequentially or higher, the company doesn't have to say much. It means the platform is growing in a very robust manner."

The median First Call forecast for earnings before interest, taxes, depreciation and amortization is $287 million for the quarter, while the mean earnings-per-share forecast is 54 cents.

With the 2005 EPS consensus at $2.80, Google is trading at about 53 times estimated earnings -- a P/E ratio that Google's supporters would say is supported by the company's growth. Expected full-year 2004 revenue of $1.79 billion implies 90% growth from 2003, and the 2005 consensus of $2.67 billion implies 50% revenue growth.

Wheeling, Dealing

Whether Google will live up to those expectations, of course, depends on several factors, notably including other players in the search business.

On Tuesday, Google announced a multiyear deal with Time Warner's (TWX - Cramer's Take - Stockpickr) AOL Europe, as part of which the America Online unit will run Google's search-engine advertising on its service, in addition to the nonpaid search engine results that AOL Europe already obtains from Google. Yahoo!'s Overture Services had previously been the paid search supplier for AOL Europe.

While replacing Overture would appear to signal growth at Yahoo!'s expense, Yahoo! sought to indicated otherwise. "Overture engages in distribution partnerships that make strategic and financial sense for our business," Yahoo! said in a statement Tuesday. "In the case of AOL Europe, these criteria could not be met."

Highlighting competition on another front, Google earlier this month released Google Search, a product that lets Windows users search not only the Internet, but also the material stored on their own computer, including material in Microsoft Word, Excel and PowerPoint files.

With Microsoft working to develop its own search business to make an incursion on Google's turf, it appears that Google is attempting to make inroads on Microsoft's desktop dominance.