After a week of playing the role of catalyst in an international spat over online
\nfreedoms between China and the United States, yesterday Google Inc. got
\nback to doing what it does best, namely churning out solid financial
\nresults ahead of Wall Street expectations.<\/p>\n
While the company's
\nrevenue growth came in a bit below analyst predictions — causing
\nshares of the Mountain View, California company to dip 5% after hours
\n— earnings per share were ahead of anticipated targets and the company
\nnetted a US$1.97-billion profit in the fourth quarter of 2009.<\/p>\n
Analysts
\nwere pleased to see paid click growth rise 13% year over year, and 9%
\nquarter over quarter, while cost per clicks — a stat which measures
\nthe success of Google's online search advertising business — jumped 5%
\nyear over year, indicating that not only Google's business, but the
\nbroader online advertising business is stronger than it was last year.<\/p>\n
"We think Google benefited primarily from a continued economic recovery
\nand strong retail ad spend trends and to a lesser extent from improved
\nYouTube strategies," said J.P. Morgan financial analyst Imran Khan.<\/p>\n
Mark Mahaney at Citi believes the worst of Google's macroeconomic
\nheadwinds are now behind it and that the company's most important
\ncyclical driver — cost per clicks — has turned around. He sees
\ndisplay advertising and YouTube as large and profitable opportunities
\nand maintains a $640 price target on the stock. <\/p>\n
Google
\nis banking on six trends playing a large role in transforming the Web
\ngoing forward — social, local, mobile, commerce, personalization and
\ncloud computing — and analysts believe the company is well positioned
\nto take advantage of each of those trends. <\/p>\n
"We see a
\nreacceleration of revenue and earnings growth in the company
\ndriven by tailwinds in display, mobile and local, which continues to
\nkeep us positive on the company\u2019s growth prospects," Canaccord Adams
\nanalysts Jeff Rath and Wayne Chang said in a note to clients on Friday,
\nreiterating their $700 price target on Google's stock (it currently
\nsits at about $560).<\/p>\n
"Mobile remains a priority driven by innovation as ad clients get better
\nat converting traffic, thereby raising monetization trends.
\nFurthermore, Google\u2019s relationship with Apple remains very stable
\ndespite the emerging competition between these 'frenemies,'" they said.<\/p>\n
While Google's domestic growth was the standout (up 11.1% year over
\nyear) fuelled by the recovery of the U.S. economy and the return of
\nlarge advertisers to the online world, some analysts were concerned
\nwith the company's international growth. <\/p>\n
"We continue to view Google as the best positioned company to benefit
\nfrom the global recovery in online advertising, with International
\ncatching up to domestic growth in 2010," RBC Capital Markets analyst
\nRoss Sandler said in a note to clients. <\/p>\n
"We would use the post-quarter weakness as a buying opportunity, as we
\nbelieve that consensus estimates remain low and should continue to
\ndrift higher in 2010." <\/p>\n
– Matt Hartley <\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
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