GOOG Up Ahead Of Earnings
The market is up as March PPI was flat and core inflation beat numbers. Shares of GOOG are up ahead of calendar first quarter earnings TONIGHT at 4:30pm ET. Investors continue look for Android momentum in the smartphone and tablet markets worldwide, especially with the Motorola acquisition integration; regaining ground in China; resurgence of Google TV; and continued growth of YouTube; expansion of social network Google+; and progress in other newer initiatives (location-based services, mapping, gaming, daily deals, Google Wallet, Google Music, etc.). The stock trades at approximately 12.6x Enterprise Value / EBIT.
Google reports first quarter earnings after the market close. Join us for LIVE coverage of the release and conference call at 4:30pm ET TONIGHT.
Here's What Wall Street Expects Tonight From Google (Various) Quarterly previews are in:
- Susquehanna: Herman Leung is expecting in-line to slightly better than Street estimates of $8.07 billion in revenue and believes the bottom line should come in better than his estimate of $9.52 per share. On the call, he is looking for an update on the timing of the Motorola acquisition, life cycle of mobile keywords versus desktop growth trajectory, stabilization of CPC rates, update on Android ecosystem (integrated hardware/software), and Google+ initiatives. He reiterates his Positive rating.
- JP Morgan: Doug Anmuth is expecting in-line results as paid clicks and CPC (cost-per-click) continue to diverge, desktop search growth remains solid, mobile and display deliver strong incremental revenue (albeit at lower net revenue and profits) and margins likely contract sequentially due to seasonality and higher general and administration spending. He maintains his Overweight rating and $686 price-target.
- Goldman Sachs: Heather Bellini is expecting a solid quarter with slight upside to consensus forecasts and slightly increasing estimates for June. That said, she continues to believe operating margin expansion, even post the Motorola acquisition, will remain a challenge as the company’s business mix changes and as it focuses on improving market share in tablets. She remains on the sidelines with a Neutral rating and $600 price-target.
- Citi: Mark Mahaney is calling for a neutral quarter with organic year-over-year gross revenue growth of 25%. He anticipates EBITDA margin to be down around 134 basis-points year-over-year to 54.2%. Some of the overhangs, like the Motorola acquisition and social media competition are becoming less worrisome, and investors can start to focus on the core and emerging businesses at Google. He reiterates his Buy rating and $750 price-target.
- Macquarie Capital: Ben Schachter has relatively muted expectations for the quarter. Revenue will likely be in-line to positive, however, limited checks into mobile and display lowers his confidence. He will be watching Google's TAC as a % of revenue. While mix issues may mask the near-term impact of mobile TAC, he thinks this is one of the most critical issues for Google going forward. Notably, Motorola still hasn’t closed. That said he reiterates his Outperform rating and $725 price-target.
Not too exciting.
In the world of iconic technology brands, two companies, Google and Apple, tower over the rest in popularity according to a new ABC News / Washington Post poll. An almost unheard-of 82% of Americans express a favorable opinion of Google overall, and a majority, 53%, express a “strongly” favorable opinion. Apple is no slouch with 74% percent seeing it favorably. In addition to trailing Google by a relatively slim 8-percentage-points overall, it lags by a wider 16-points in strong devotees.
The most interesting rumor of what Google should do with Motorola is one out of Asia. Sources say the search giant might sell Motorola’s handset unit to Huawei. Back in 2004, IBM sold their PC division to Lenovo, who no one knew at the time. Why does this matter? Because Huawei is in the right position to do the exact same thing; buy Motorola, leverage their brand assets, and then quickly become a leader in the smartphone space. This is all speculation of course. Huawei has the talent and the ambition, and Motorola has the experience and the relationships. As of now, no one is giving a straight answer and even Google insiders are baffled.
Facebook Could Actually Be A Threat To Google's Core Business (Business Insider)
One of Facebook's innovative ad formats, Sponsored Stories, can be an ROI-profitable means of doing direct-response advertising. This is potentially hugely important for Facebook and its war with Google, as it means that Facebook could start competing directly with Google for direct response, bottom of the funnel advertising budgets, and not just media/brand advertising budgets. And Google's bottom of the funnel business is the most amazing online business model because it delivers measurable, reliable ROI for direct response advertisers.
Google A Likely Candidate To Buy Travelzoo (All Things Digital)
Travelzoo’s stock soared by nearly 30% yesterday on news that the 14-year-old deals site is planning to sell itself. A list of obvious acquirers includes Google, which famously failed to buy Groupon for $6 billion. More recently, Google bought travel company ITA Software. Amazon could also be interested as it pushes AmazonLocal, its daily deals business; however, it already owns a percentage of LivingSocial, the second-largest deals company after Groupon.
Google is rolling out a redesign of its Google+ social network that has some 170 million users, up from an estimated 62 million in January. Vic Gundotra, a senior vice president at Google, wrote in a blog post today that the Google+ upgrades improve the site's navigation, make it easier to join online discussions and adds a dedicated Hangout page. He also said the company is planning more changes to simplify the use of all Google products. Here are some screen shots of the redesign thus far. And here is everything you need to know to use it.