Google Inc. (NASDAQ: GOOG) is set to report earnings after the close of trading on Thursday and this is likely to set the tone for many internet operations. In late-morning trading, Google shares are up 1.25% at $643.92 and the market capitalization rate is more than $209 billion.
Thomson Reuters has estimates of $9.65 in earnings per share and $8.15 billion in revenues. Google never gives formal guidance but the estimates for the quarter ahead are $10.01 EPS and $8.43 billion in revenues.
The current focus seems to be overly dominant regarding the pay-per-click as those costs have been creeping lower. Last quarter the company showed that its cost-per-click was down 8%. It seems that going forward the real focus is really going to be Facebook’s growing advertising efforts and how Microsoft Corporation (NASDAQ: MSFT) can use its ownership influence in Facebook to increase the power of the Bing search results. Yahoo! Inc. (NASDAQ: YHOO) is now only a reference point for the past and its recent employee firings may only be followed by more firings.
Total employees at the last report in January came to 32.467 and the company’s cash and cash equivalents came to $44.6 billion.
Options traders appear to be braced for a move of up to $20 in either direction if we use the April monthly expirations that expire next week (rather than weekly options). Just keep in mind that Google shares fell by about $50 from around $640 to $590 in January when the search giant reported earnings.
Google’s chart is interesting today as shares have peaked just under $660 recently and at $670 at the start of 2012. The current 50-day moving average is down at $620.45 and the longer-term 200-day moving average is $587.54.
Analysts have a consensus price target of about $721 for Google as of today.
Our take is very simple here. If Google has another disappointing earnings report, the call for a more focused approach by Larry Page is going to grow much louder. The call to return cash via a dividend may grow as well.
JON C. OGG