This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Google Earnings Preview: What Wall Street's Saying

Stocks in this article: GOOG GOOGL

Updated from 12:22 p.m. to include thoughts from Topeka Capital Markets analyst.

NEW YORK (TheStreet) -- Google (GOOG) reports first-quarter earnings after the close, and all eyes will be on whether cost-per-click (CPC), a key advertising metric, will start to turn around.

Last quarter, Mountain View, Calif.-based Google earned on a non-GAAP basis $12.01 per share, generating $13.55 billion in revenue, excluding traffic acquisition costs (TAC). In a survey from Thomson Reuters, analysts expect the Internet search giant to earn $12.21 per share on $16.753 billion in sales, including TAC. Excluding TAC, revenue estimates were $13.41 billion.

Google (GOOGL) noted that cost-per-click, a key advertising metric, fell 11% year-over-year and 2% sequentially, but that paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 31% over the fourth quarter of 2012, and 13% sequentially.

For this quarter, analysts surveyed by Thomson Reuters are expecting Google to earn $6.40 a share on $15.52 billion in revenue, though that number likely includes traffic acquisition costs (TAC). Generally, analysts exclude TAC to drill down and get a truer number.

This will be the last quarter Google has Motorola Mobility dragging down its results, after the company sold Motorola to Lenovo for $2.91 billion in January. Though the company paid $12.5 billion for Motorola, it was able to keep the valuable patents in the deal, and also sold Motorola's set-top box business to Arris (ARRS) in 2012 for $2.35 billion.

Shares of Google were higher in Wednesday trading, gaining 2% to $547.29, ahead of the results, due after the close of trading.

According to eMarketer, Google accounted for 32% of all digital ad spending worldwide in 2013, up from 31.3% in 2012. The company is holding back Facebook FB in this arena, which had 5.8% of all global digital ad spend in 2013, up from 4.1% in 2012. According to eMarketer, the worldwide digital advertising market totaled $119.84 billion in 2013, and is expected to reach $137.5 billion this year.

Aside from the core results, analysts and the media will ask questions on some of Google's other projects, including the recent purchase of Titan Aerospace (which will help Project Loon), YouTube, Google Glass (which went on sale Tuesday) and perhaps Google Fiber, which is already in Kansas City, Austin, Texas and Provo, Utah, and is expanding to 34 additional cities in the near future.

Analysts by and large were positive going into the report, with several of them focusing on the company's product listing ads (PLAs), Google's newest advertising venture. Here's what a few of them had to say.

Jefferies analyst Brian Pitz (Buy, $700 PT)

"Ahead of Google's 1Q print on Wed., we are increasing our price target from $650 to $700 as we remove Motorola's operating losses from the model. We are also modeling the Class C dividend, which is functionally similar to a two-for-one stock split. For the qtr., traffic trends look solid and our proprietary Product Listing Ad (PLA) checks suggest marketers are continuing to invest heavily in PLAs."

"According to Kenshoo, 29% of marketers are allocating new, incremental budgets to support their PLA campaigns, and 83% of marketers find PLA performance to be on-par or better than traditional search ads. Given this kind of return on investment for advertisers, we believe Google likely benefited as retailers pointed people to their online stores. Interesting US movers include Rakuten (from #20 to #2), Sephora (#4,955 to #18), Marin (#29 to #19), Walmart (#10 to #7), and Aliexpress (Alibaba, #585 to #105)."

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs