Google expected to report an 88% profit gain
By Ben Charny, MarketWatch
Last Update: 10:08 PM ET Jan 25, 2007
SAN FRANCSICO (MarketWatch) -- Google Inc. is expected to report a big jump in fourth-quarter profit on Wednesday, on the strength of its dominating Internet search engine and advertising business.
For the period ended Dec. 6, Google's expected to post a profit of $2.90 a share, which is an 88% increase from a year ago. Meanwhile, Google sales should top $2.2 billion, according to a Thomson Financial survey.
Google, based in Mountain View, Calif., is benefiting from a surge in the amount of Internet advertising spending, which increased about 20% last year to more than $20 billion.
Because it operates the No. 1 ranked Internet search engine, Google has also become a virtual magnet for spending on Internet search ads, which are text ads, or sponsored Web links, that appear next to its search engine results.
According to several estimates, Google's share of the Internet search market grew beyond 45% in December, which is nearly twice the market share of Yahoo Inc.'s No. 2 Internet search engine, and four times that of other top five ranked engines.
There's also growing analyst consensus that Google may exceed expectations on Wednesday, having done so during all but one of its quarters since going public.
That's especially so for its just concluded fourth-quarter, given how Yahoo, which had a tumultuous quarter that included an executive shake-up, was able to report a 13% gain in its advertising sales earlier this week. By comparison, Google's fourth-quarter was smooth sailing.
"All boat's are being lifted," Global Equity Research analyst Trip Chowdhry said in an interview. "If Yahoo can report a 13% gain in sales, then imagine what Google's going to do."