Google Needs Something More Than Search - TheStreet

Google Needs Something More Than Search

A break above $600 will require growth beyond search.
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Google

(GOOG) - Get Report

steps into its second-quarter earnings report later Thursday with a nice tailwind.

Shares of the search giant have gained about 15% since its last quarter's results and closed Wednesday at $549.50.

Still, the company -- which has topped evermore bullish analyst consensus estimates by at least 8% each prior quarter -- will face a high bar. Given its history, a solid financial performance from the search ad business that has made up almost all of the company's revenue to date is already built into expectations.

As a result, how the company is fairing in new key areas will take center stage.

For the second quarter, analysts surveyed by Thomson Financial/First Call forecast earnings of $3.59 a share on revenue of $2.68 billion.

Wall Street grew bullish on the stock over the quarter, with a slew of analysts raising price targets over the quarter. But while the stock now commands a median price target of $600, the company will likely have to show investors how it plans to seize on opportunities beyond its core search market before breaking through that mark.

The booming display ad market, which Google plans to storm via its recent $3.1 billion acquisition of DoubleClick, will be the company's next act. But the specifics of Google's strategy will be significant. The company has previously said that it remains undecided about linking user search and display data because of privacy concerns.

To watch Vishesh Kumar's video take of his column, click here

.

Indeed, despite the search giant's repeated claims that it would treat advertising data gleaned from DoubleClick as confidential, Google executives have been called to testify before the House and Senate about the prosoped takeover, according to reports on Wednesday.

While rivals

Yahoo!

(YHOO)

and

Microsoft

(MSFT) - Get Report

have no similar qualms, Google faces unusual amounts of scrutiny when it comes to privacy concerns. Tapping on data from both search and display markets would allow the company to take full advantage of the

DoubleClick

deal -- and should be cheered by investors.

During the past three months, Google also beefed up efforts in its online application unit. The search giant acquired security company

Postini

, which will allow it to offer more-secure services to larger businesses. And Google also unveiled a partnership with

Salesforce.com

(CRM) - Get Report

, which could also ultimately help it push deeper into the market for applications.

As Google continues to look increasingly oversees for revenue, its international efforts also will be worth watching. While the company continues to lag market leader

Baidu.com

(BIDU) - Get Report

by a wide margin in China, it seems to be on much more solid footing elsewhere.

"The potential for higher international revenue should become increasingly apparent this quarter and over the next several," American Technology Research analyst Rob Sanderson wrote in a research note on Wednesday. This potential is already being displayed in the U.K., with Continental Europe and Latin America also picking up steam."

Finally, Google will delve into the early results for the Universal Search feature it introduced earlier in the quarter. The new format lumps together search results from different categories, such as video, news, and local search. Google hopes that the new format can keep the rate of search growth at a blistering pace.

Want more? Check out TheStreet.com TV video.Vishesh Kumar digs into what Google needs to do.