• Forbes, Wednesday, April 15, 2009 12:15 PM

Google is expected to pass "an ignominous milestone" when it delivers first quarter earnings tomorrow, says Forbes' Quentin Hardy: analysts are expecting the search giant's first-ever decline in sequential revenue. The Street consensus is revenues of $4.1 billion, down 3% from the fourth quarter of 2008, though still up 11% from a year ago.

Despite this "black eye," Hardy says that everyone is blaming the economy, and not Google, for the expected decline. But the reality is, "there's still much for investors to watch when Google reports its numbers," he says, particularly ad performance by vertical sector, and how well the company manages its fortunes. Hardy advises investors not to look too much into numbers showing improvement from January-March, as March is typically stronger than both January and February. The more apt comparison, he says, is with the year earlier.

Another important question, Hardy says, is how well CEO Eric Schmidt has managed costs. The company has made cutbacks, including 200 layoffs and shuttering certain under-performing applications and services. CFO Patrick Pichette, who joined the company in late August, has most likely ordered these cutbacks, Hardy says.

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