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Big Implications for Poor Google Results

  • Wired, Thursday, April 17, 2008 11:32 AM
As you probably know by now, Internet bellwether Google will deliver its earnings after today's close amid mounting anxiety that the search giant bombed the first quarter. As Bernstein Research analyst Jeffrey Lindsay says, "There's a lot riding on (these results)," as Google "is such a big part of the Internet that if it's doing well, it doesn't necessarily mean the other guys are doing well. But if Google's doing badly, it means everybody's doing badly." Indeed, such is the search giant's importance that a miss would likely weigh on the entire stock market, Bloomberg says.

Thanks in part to a series of reports from comScore that growth in the number of paid clicks on Google sites in the U.S. is stalling, analysts in January cut their Google's earnings estimates from $4.84 per share to $4.52. Despite Google's claims that it's tweaking its advertising system to weed out low quality ads and make higher quality ads more effective, analysts did not raise their expectations.

More worrying to advertisers is the effect that a recession might have on Google's search advertising business. The wisdom goes that if consumers buy less stuff, advertisers will spend less to reach them, not more. But Wall Street analysts and Google execs have come up with all manner of reasons why Google is recession proof. We'll find out today. Analysts expect Google's first quarter earnings to show growth in the range of 25% to 30%.

Read the whole story at Wired »

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