I guess we need to do this every day as it is so volatile…
Google is very unlikely to beat earnings since the mean estimate is for $1.76/share and the whisper # is $2.
How they can possibly do this when the projections for revenues are less than last quarter is beyond me anyway since they “only” earned $1.35 last quarter, and that was a blow-out number.
Yahoo only earned .68 per share of Google so even if Google took Yahoo’s entire profits and added it to their 3rd qtr they still wouldn’t beat the whisper number for this quarter.
Google is suffering from expectation inflation with about another penny per month being added to the estimates.
Check out the Analyst Estimate section in Yahoo: http://finance.yahoo.com/q/ae?s=GOOG
and look at the Earnings History Surprise row. Notice the narrowing trend downward? Yahoo went from a 14% surprise up last quarter to a -5% miss this quarter – If Google does that the Titanic will look unsinkable by comparison.
Here’s the real problem. Earnings for the first 3 quarters were: $1.29, (+4%=) $1.36 and (+10%=) $1.51 yet we expect a 33% jump in the 4th to get to $2.
Google doesn’t do traditional advertising so they don’t get a “Christmas rush.” In fact, it could be argued that the average person spends LESS time clicking ads on Google during the holidays and more time on Amazon or Ebay.
Maybe holiday advertisers step up their Adwords fees to attract more people during the 4th quarter and that will save them but it’s hard to see the driving force for growth that will equal last year’s buzz (they only went public that September) that will give them the same kind of kick this year.
On the bright side, the trend I noticed back in November continues as Google is leading CME around by the nose. If GOOG goes up, buy CME, if GOOG goes down, sell CME – it’s ridiculous but it works! Also, CME earns more per share today than Google is projected to earn for 2006…
http://finance.yahoo.com/q/bc?s=GOOG&t=3m&l=on&z=m&q=l&c=cme
