24/7 Wall St.

Google Inc. (NASDAQ: GOOG) is set to report earnings after the close of trading today. Analysts are estimating earnings of $7.86 EPS and $6.55 billion in revenues for the June quarter; those estimates are $8.28 EPS and $6.88 billion in revenues for the September quarter according to Thomson Reuters.  As a reminder, those revenues are ex-TAC revenues as in ex-Traffic Acquisition Costs that it pays publishers using AdSense.  For the same quarters in 2010, Google brought in earnings of $6.52 per share for June and $6.69 per share for September.

After having closed at $538.26 on Wednesday, its 52-week trading range is $447.65 to $642.96.  At current trading levels the shares are roughly 16.3% down from its 52-week high and are 20.2% up from its 52-week low.  The average analyst price target is $694.32.  We have seen two very opposite analyst calls of late.  One was the street high of $800 and one was a downgrade to a $600 target.

This will effectively mark the first real quarterly earnings report covering the leadership of new CEO, Google co-founder, Larry Page.  We will be paying close attention to headcount as Larry Page is believed to want to run things the way he wants and spend more than Wall Street may be comfortable with.  This is all acting to drive up expenses.  Google’s headcount was 26,316 full-time employees at the end of the latest quarter versus 24,400 at the end of 2010.

The good news is that the massive downward pressure has reversed but there may be a technical no-man’s land being seen here.  That $538.26 price compares to a 50-day moving average of $518.17 and a 200-day moving average of $571.46.  If we use just historical prices the path is similar: Our first resistance level would be close to $540 and then much more as its gets closer to $560 in price; strong support appears to be $520 in the stock.

Keep in mind that options expire tomorrow.  It appears as though options traders are initially pricing in a move of up to $20 in either direction but that may change considerably as the trading day progresses.  The initial move in the after-hours after the prior report was more than $25 lower around $551 and shares the following day closed down almost $48 at $530.70.

The company’s cash was $36.7 billion at the end of the last quarter.  Another note on operating expenses is that the last quarter expenses were 33% of revenues versus 27% in the year earlier. That was expense growth over revenue growth by a factor of 2:1.  Google-owned sites were also responsible for 69% of revenues.

Google reports shortly after the close on its investor relations site, and as a reminder the company does not offer guidance.

JON C. OGG