Ahead of the Bell: Google seen posting stronger 2Q
NEW YORK (AP) — Higher earnings and revenue are expected at Google when it reports second-quarter results Thursday. But analysts and investors will be watching for any impact from an uncertain economy and a possible slowdown in search advertising spending.
The quarter will be more complicated than usual because Google is now including operations from the former Motorola Mobility Holdings Inc., which the search leader bought for $12.5 billion in May.
The company plans to break out its results into three segments: the historic Google results before the Motorola acquisition; Motorola Mobility, the smartphone company; and Motorola Home, which makes set-top boxes and other gadgets. There will also be the results of the combined company. That's four sets of results to wade through.
The latest report comes on the heels of a better-than-expected first quarter for Google, which helped reassure investors following a lackluster end to 2011. The results were helped by an increase in "paid clicks," but the prices of its search-driven text ads continued to decline in the first quarter.
There are several possible reasons for this. For one, people are using their smartphones more often, and ads on smartphones are cheaper and there are fewer of them than on computers. Facebook, one of Google's main rivals, may be another culprit, if businesses are shifting online ad spending to the social network.
Investors may also have questions about the success of the Nexus 7, a small tablet computer Google unveiled in June and began selling this month. The Nexus 7 appears to be a direct challenge to Amazon's Kindle Fire and the Nook Tablet from Barnes & Noble.
Google is a good way to monitor the health of electronic commerce because it runs the Internet's largest advertising network. It's also one of the world's most powerful companies, so what happens to it can affect millions of people and businesses around the world.
The results come two days after Yahoo reported a lackluster second quarter. Yahoo's second-quarter results showed the Internet company is still struggling to revive its revenue growth, even as more advertising shifts to the Internet. Tuesday's report coincided with the arrival of Yahoo Inc.'s latest CEO, longtime Google Inc. executive Marissa Mayer.
Analysts, on average, are expecting Google to report earnings of $10.10 per share on revenue of $8.43 billion, according to a poll by FactSet. The revenue figure excludes Google's advertising commissions. A year ago, Google earned $2.5 billion, or $7.68 per share. Its revenue grew 32 percent to $9 billion, and its revenue after subtracting ad commissions was $6.9 billion.