Can Google Stay Good?
Tech investors are eager to hear from Google, Thursday after the bell. Will results from this dot-com darling shake Silicon Valley?
It seems no company can fully escape the pain of this terrible recession – and Google is no exception.
As you may know Google makes most of its money from ads and the deepening downturn has curtailed ad spending in every area -- in other words companies have slashed their budgets for commericals, print ads and yes, even Internet ads.
That trend is expected to shake Google's bottom line. Most analysts believe that for the first time Google will report net revenue that has declined from one quarter to the next.
That’s not to say profits aren’t still rising, they are. They’re just rising at a slower pace; up by 7 to 8 percent from the same time last year.
While Google hasn't been as hard hit by the marketing slowdown as newspapers and other media, it has left significant dents in a moneymaking machine that once seemed impervious to the turbulence.
What should you expect?
Analysts surveyed by Thomson Reuters expect Google to earn $4.92 per share on revenue of $4.08 billion.
However Citigroup Internet analyst Mark Mahaney tells Fast Money that he's more bearish on Google than most of his peers. He says, “I think Street estimates are too aggressive. There’s no evidence that there’s upside. I think investors should be cautious on Google.”
And on the other side of the coin Wunderlich Securities analyst Martin Pyykkonen believes his peers have underestimated Google's ability to shake off the recession. He expects Google to earn $5.08 per share. "We believe there is less than a 20 percent chance of Google disappointing" investors, Pyykkonen wrote in a Monday research note.
What’s the trade?
I think the trade is to wait and when it trades over $400 I’d get short, counsels Guy Adami.
They’ve run far and fast, adds Pete Najarian. I think you have to be careful.
I’m lukewarm on Google, adds Karen Finerman. I wouldn’t go long or short.
What do you think? Tell us now!
> Earnings preview: Low expectations for Google 1Q
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Trader disclosure: On Apr. 15th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (WFC), (AAPL), (WMT), (GS), (GE), (SDS), (GCI); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU) ; Finerman Owns (BAC) PreferredFinerman's Firm Owns (CTX), (MSFT), (RIG), ; (PBR), (UNH); Finerman's Firm Owns (BAC) Preferred; (WFC) Preferred; Finerman's Firm Is Short (BAC), (WFC), (MDY), (SPY), (USO); Najarian Owns (BX) Call Spread; Najarian Owns (C) Call Spread; Najarian owns (GS) Calls; Najarian Owns (INTC) Calls; Najarian Owns (JPM) Call Spread; Najarian Owns (PALM); Najarian Owns (RIO) Calls; Najarian owns (VAR) Call Spread; Najarian Owns (XHB) Call Spread
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