Thursday, July 7, 2011

Google Inc. (NASDAQ: GOOG): Q2 Earnings Preview 2011

Google Inc. (NASDAQ: GOOG), owner of the world's most-popular online search engine, is scheduled to release second quarter earnings after the closing bell on Thursday, July 14, 2011. Analysts, on average, expect the company to report earnings of $7.87 per share on revenue of $6.54 billion. In the year-ago quarter, the company reported earnings of $6.54 per share on revenue of $5.09 billion.

Google Inc., a technology company, maintains index of Websites and other online content for users, advertisers, Google network members, and other content providers. The company's innovations in web search and advertising have made its web site a top internet property and its brand one of the most recognized in the world.

In the preceding first quarter, the Mountain View, California-based company's net income was $2.30 billion or $7.04 per share, compared to $1.96 billion or $6.06 per share in the fourth quarter last year. On an adjusted basis, the company earned $8.08 a share in the second quarter. Revenue rose 27% to $8.58 billion from $6.78 billion. Analysts, on average, expected the company to report earnings of $8.13 per share on revenue of $6.44 billion.

Google is the undisputed market leader when it comes to web search. According to market research firm ComScore, Google held its place as the number one US search provider with a 65.5 per cent market share in May.This represented a five per cent monthly increase for Google

Google is also pursuing an aggressive strategy in rapidly growing mobile market. According to ComScore, out of 234 million U.S. mobile subscribers, 76.8 million owned smartphones during the three months ending in May 2011. Gartner says that the global mobile-ad market will grow from $3.3 billion in 2011 to $20.6 billion in 2015. Google aims to grab the lion's share of that revenue. In mobile space, Google is taking on Apple Inc.'s (NASDAQ: AAPL) iPhone with its Android operating system. Google has made its Android operating system software available on a variety of different mobile devices. The company has seen its Android platform appear on more than 300 devices, with 400,000 Android gadgets launching every day.ComScore 's mobile subscriber market share report for the three month average period ending May indicates that Google's open source operating system, Android continues to increase its popularity in the United States. The report revealed that Google Android grew 15 percentage points since February, strengthening its number 1 position with 38.0 percent market share. In the same three-month period, Apple's (NASDAQ: AAPL) U.S. market share increased from 25.2% share to 26.6% share, a 5% hike. According to Gartner, Android will run on 49.2 percent of smartphones sold next year. 

Google has been leveraging its Android operating system to make major gains in the smartphone industry. With its forthcoming Google Wallet payment service, an Android smartphone will become a credit card.

Google has also long sought to develop a social service that can counter the popularity of Facebook. The company recently unveiled a new service designed to compete with Facebook Inc. and others in online social-networking. Google+ utilizes contacts developed by users of other Google services, and enables users to place them in distinct categories. Other aspects of the service include video chat, photo albums and group text messaging. 

Looking ahead, Google's growth is expected to rev up exponentially, thanks to the perfect proliferation of mobile, social and local applications on handheld devices consumers carry with them wherever they go.

The company's stock currently trades at a forward P/E (fye Dec 31, 2012) of 13.77 and PEG Ratio (5 yr expected) of 0.88. In terms of stock performance, Google shares have lost nearly 10 percent since of the beginning of the year.

Full Disclosure: None.
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