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Google Earnings Preview: What Wall Street's Thinking (Update 1)

Updated from 9:50 a.m. to include thoughts from Goldman Sachs.

NEW YORK (TheStreet) -- On the back of Google (GOOG - Get Report) selling Motorola Mobility to Lenovo for $2.91 billion, the search giant reports fourth-quarter earnings after the close.

Though it's clear that making mobile phones didn't work out for Google -- Motorola Mobility had an operating loss of $248 million in the third-quarter of 2013 -- part of the reason for selling the unit is that Google's other units are on fire. 

As the world increasingly goes mobile, Google is perhaps the leading beneficiary, especially as it relates to search. Its Android operating system is on nearly 80% of smartphones, according to research firm IDC. Apple's (AAPL) iOS, Microsoft's (MSFT) Windows Phone and BlackBerry's (BBRY) BlackBerry 10 operating system account for the rest, with iOS owning 15.3% of the smartphone market.

Last quarter, Mountain View, Calif.-based Google earned $10.74 per share on $11.93 billion in revenue, excluding traffic acquisition costs (TAC). Though search is a very profitable business, analysts will be looking at the company's advertising business to see whether cost-per-click (CPC), a key advertising metric, is trending lower. Last quarter, CPC fell 8% year-over-year, and 4% sequentially.

However, paid clicks -- which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 26% year-over-year and 8% sequentially. Google shares were rising 3.6% to $1,146.55 in early Thursday trading.

GOOG ChartGOOG data by YCharts

Analysts will also be looking at the company's Product List Ads (PLAs) business to see how advertisers and merchants are reacting towards it. PLAs compete with Amazon (AMZN), as the two Internet behemoth giants go head-to-head to vie for consumer dollars, with Google Shopping, and both companies seemingly getting into every business.

Google recently announced its intention purchase Nest, the maker of smart fire alarms and thermostats and a move into the Internet of Things for $3.2 billion, so analysts will also be looking forward to hear whether the company has any update on the purchase and future plans.

In a survey from Thomson Reuters, analysts expect the Internet search giant to earn $12.21 per share on $16.753 billion in sales.

Here's what several analysts are expecting going into the report:

Bank of America Merril Lynch analyst Justin Post (Buy, $1,250 PT)

"Key items for the call include Google Website growth trends, paid click and CPC trends, Google Play growth (in other revenues), Enhanced Campaign commentary (early advertiser feedback), Product Listing Ads (PLAs) update, TAC trends, YouTube activity, and Google Chromecast and Chromebook commentary. If results suggest strong Enhanced Campaigns and Google Play traction, we think there is room for modest multiple expansion on mobile/Android appreciation."

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