Google Earnings Preview: 360-Degree View from Analysts to Charts to Fundamentals (GOOG)

Google Inc. (NASDAQ: GOOG) is set to report its first quarter earnings for 2011 after the close of trading today.  Thomson Reuters has consensus estimates of $8.11 EPS and $6.32 billion in ex-TAC revenues.  Be advised that consensus estimates on both earnings and revenues have drifted lower since the end of last week. Google does not offer guidance, but next quarter estimates are $8.04 EPS and $6.35 billion in revenues.

Shares were just above $580 last week and the stock is at $577.50 in mid-day trading Thursday.  Shares were trading at $602.00 about 90-days ago.  What Google perhaps faces the most is a technical no man’s Land.  The 50-day moving average is up at $593.42 and the 200-day moving average is down at $559.08.  Investors better hope that StockCharts.com is wrong on its point & figure chart analysis because it has a price objective of $475 on Google.

Wall Street analysts often have a much different take than technical analysts.  The consensus analyst target is still almost at $725 and we just had a very positive analyst call with an $800 target last week based upon raised estimates and expectations.

Options expire tomorrow and it really looks as though options traders are only bracing for a move of $11 to $13 or so in either direction.  That seems small for Google, but with the VIX down at $16.66 maybe that is right.

We just saw the short interest this week and Google’s short interest saw another small drop of 8.9% down to 3.435 milllion shares at the end of March.  That was actually the second lowest reading in the short interest so far in 2011.

Remember, revenues are ex-TAC (traffic acquisition costs) and Google is under new management for this report with Larry Page as CEO.  How investors will treat this is probably based upon many parts, but ultimately the hope will be from investors that Google will beat earnings.

Here were some of last quarter’s key metrics reported outside of earnings:

• Net cash provided by operating activities in the fourth quarter of 2010 totaled $3.53 billion.
• It ended the quarter with $35.0 billion in cash and equivalents. 
• Google listed its total headcount was 24,400 full-time employees as of December 31, 2010, up from 23,331 full-time employees as of September 30, 2010.
• Google Sites revenues from its own websites generated 67% of revenues at $5.67 billion, a 28% increase over fourth quarter 2009 revenues of $4.42 billion. 
• Google Network revenues from partner sites and AdSense programs rose 22% to $2.50 billion, which is 30% of total revenues. 
• International revenues were 52% of total revenues at $4.38 billion, compared to 52% in the third quarter of 2010 and 53% in the fourth quarter of 2009.

JON C. OGG