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January 25, 2007


C. Fischer


Your comment about the street low balling the number.. Google's two best quarters, in terms of sequential revenue gain, have been Q305 to Q405 (250MM net gain, street "expected" more, stock crushed) and Q405 to Q106 (241MM net gain, street "expected" way less, stock jumped) This quarter Wall Street is EXPECTING a 330MM dollar jump, which is 80MM more than they've ever done in a single quarter just to match estimates. Not saying they won't or can't do it (FX trends will help) but geez, I think that bar is set pretty darn high. What do you think?


$2.32B, $2.49


opens at $512


$2.3B opens at $530. Analysts upgrade consensus earnings for 2007 to closer to $15 per share (non-gaap) and closer to $18.5 for 2008. Bottom line could be tricky if they pull out any weird tax thing or if checkout costs more than expected.

I'm interested to hear about what you think a good beat would be Henry. I think anything above 2.25B would be a strong number

J.  Frankel

2.29b rev and stock opens at 438. Company very excited about future growth prospects but many past experiments will not pan out. Will have to continue to invest heavily in new projects and spend big $ on aquisitions. Competition fierce and will need to innovate to keep up current growth rate. Analysts mostly remain bullish on the story but prior bears argue the growth story is ending.


2.5 Billion


danny marsh

2.9 BILLION 569 opening........ may 7 655.......


Revenue ex-TAC - $2,315,890K
Wednesday morning open - $507

Rationale - Stronger than expected revenue, but EPS shaved by shares issued to buy YouTube plus additional funding for Talk on the conference call about capex growth exceeding revenue growth will limit upside from the strong revenue number.


I mean, *Thursday* morning open - $507


2.47B Rev and will open 535

Carl Schwarz

2.35b, $2.58 opens at $532

Gabriel Dubois

$2.35b net rev based on 22% sequential growth & significantly lower TAC [28%]. EPS in the $3.10 range resulting in a $550 open next day.

C. Fischer

Ok, so it looks like most of the people on here, minus some very optimistic outliers, are looking for 2.3-2.4B in revenue, so taking the midpoint at 2.35, that would represent a 500 million dollar sequential increase, more than double the increase of their best quarter ever (last christmas) or any other quarter.

Does anyone have any analysis on how they think that is possible? Domestic query growth grew 8%, I think it's a fair assumption to say international grew more (but how much more?) Does anyone have any analysis on why they think this is going to happen, or are we all just optimistic longs? :)

My guess: Revenue 2.22 Billion, opens at $475


2.24 billion opens at 519

Rob Zidar

$2.34 Bil., $480


$2.23 billion, $478.61

gray williams

hmmm...i'll take it from this angle - that its more a function of their increasing share of a growing total internet ad spend.

* the amount spent on Internet advertising from January '06 to the end of September was $12.1 billion, roughly what was spent in all of 2005 (Google's revenues were $6.1B, or half total internet ad spend)
* In the third quarter, $4.2 billion was spent on Internet advertising, representing a 33% increase from the year-earlier period....Google's net rev was $2.7B, or 64%.
* Internet advertising spending projected to reach $16 billion in 2006...that means total projected spending for 4Q=$3.9B...which seems conservative. Why would 4Q07 be down from 3Q07? Doesn't make sense. Instead, I'm going to estimate that the 4Q07 increased sequentially by 10% to $4.7B.

Google's share is increasing so I'll give them 68% of the total internet spend of $4.7B, which means $3.2B in revenues. I think that's too low.

The earnings are the big question. The value of keywords is skyrocketing as the big guys get in to keyword search, but GOOG's capex/opex is on fire, so I'm going to assume the two cancel. Make it $2.98 Pro forma, or $2.64-$2.75 GAAP.

As to what the stock will open at? Make it 582. (31 p/e x $18.77 projected 2007 eps)

C. Fischer


Thanks for the analysis, that is an interesting way of looking at it (ignoring traffic numbers and instead focusing on total internet spend.) You numbers seem to be confused a bit - 3.9 to 4.7 is 20+% percent sequential jump, not 10, googles gross revenue was 2.7, not their net, and google didn't add 4 percentage points of market share in the quarter (it was around 1.) What makes you think keyword prices are jumping? From Keyspan, last quarter was the first in a long time that reversed a steady slight decline in prices (and I believe this had a lot to do with Google's algorithm change with regard to their landing score, but I really don't know that.)

Wednesday will be interesting.


2.44 B
2.49 per share
Stock opens at 542

gray williams

Hey there - est. $4.7B in 4Q is a 10% jump from 3Q06 4.2B actuals.
says $2.7B 3q06 I'm looking at total revenue to get to the $3.2B

What's your definition of "marketshare"? If its something like Comscore, their statistical analysis could be misleading, (they show GOOG w/about a 49% share of total "search") as it doesn't speak at all to monetization rates, premiums, etc...

Other analysis I've seen shows that not only is the total traffic generated from Google much, much higher, but their monetization is stronger - they own a larger percentage of higher-value "intent" traffic. In other words, a search done on Yahoo/AOL/MSN is worth less than a Google search, because a higher percentage of Google searches end in a desired outcome (e.g. sale.)

Regarding increasing keyword search prices, this estimate is more BHAG than science, and "jumped" is probably a bad word to use. I'm less familiar with keyspan's methodologies, but I do know that increasing prices - created by larger advertisers moving more of their budgets online - for select keywords have pushed little guys out of the market.

Gabriel Dubois

The overall tax rate for the full year 2005 came in at 31.6% and for Q4 at 41.8%. The Q4 tax rate increase was a function of not charging enough in the prior 3 quarters thus resulting in a huge hit on eps in Q4.

This may repeat itself again this year since management has been forecasting approximately 30% but using 27%, 26% and 29% in Q1, Q2 and Q3, respectively.


you guys are absolutely bonkers. one thing is clear from google's earnings reports is that their rate of growth is slowing (the second derivative of their growth is negative). A whole bunch of you are predicting a huge re-acceleration in revenue growth which seems absurd, unless you've got a new, substantial, source of revenue that you can point to. Any number above 2.5B seems unfathomably high, and now that I see so many people who think that Google is going to produce those numbers, I think that even if they beat handily as i expect (2.3B), their stock may well sink. Expectations are now ridiculous.


Isn't this the first quarter with myspace google search enabled? maybe that is the wild card that will goose the numbers.



C. Fischer


I agree with you, I think most of the people here are just pulling numbers out of thin air by the formula of "take the analysts' numbers, add 10%." If google can post a 2.25B quarter, I think that would be pretty incredible for them. Wednesday should be interesting.


C. Fischer


I agree with you, I think most of the people here are just pulling numbers out of thin air by the formula of "take the analysts' numbers, add 10%." If google can post a 2.25B quarter, I think that would be pretty incredible for them. Wednesday should be interesting.


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