![\"Larry](\"http:\/\/static.businessinsider.com\/image\/7a7a6c7979e21a49401e9800\/larry-page-white-coat.jpg\")
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<\/span>Here’s the release…<\/a><\/p>\n Bottom Line:<\/strong> Solid quarter, in line with expectations. Nothing to hyperventilate about. As expected, the stock is trading off in the after-market.<\/p>\n Revenue was slightly above consensus, as was EPS. Both numbers were in line with whispers (and investors were hoping for more). Paid clicks and revenue per click both grew nicely, up 15% and 7%, respectively.<\/span><\/p>\n Cash flow was, once again, astonishing. The company generated $2.35 billion of free cash flow in the quarter, for an annualized rate of nearly $10 billion. Google now has a dizzying $27 billion of cash.<\/span><\/p>\n Overall, Google is still robustly healthy. The search business continues to recover from the recession, and it will probably drive solid growth for the balance of the year. The search business is maturing, however, and the company has yet to develop a second major growth engine.<\/span><\/p>\n Unless\/until Google develops a second growth engine, we expect the stock’s multiple to gradually compress. The stock currently trades at about 17X enterprise value to free cash flow. 10X-15X is probably more reasonable for a company this size with a maturing core business and no major new growth driver in the hopper. <\/span><\/p>\n All that said, it’s hard to imagine a company in stronger financial shape than Google (save Apple and Microsoft). If the market continues to rise, Google’s stock probably will, too. Key Metrics vs Estimates:<\/strong><\/p>\n Reading the release in detail now…<\/p>\n The conference call starts at 4:30 PM.<\/a> Please join Rory Maher for live notes and commentary.<\/p>\n CONFERENCE CALL NOTES<\/strong><\/span><\/p>\n Conference call starts at 4:30 PM.<\/a> Click to listen.<\/p>\n CFO Patrick Pichette leading the call, as expected CEO Eric Schmidt is not on the call.<\/span><\/span><\/p>\n Already stepped up hiring (added 786 employees this quarter) and expect to continue hiring throughout the year (mostly engineering and sales). Also, expect more acquisitions this year.<\/span><\/span><\/p>\n Strength was also seen in display (especially Google content network).<\/span><\/span><\/p>\n Mobile growing “nicely.” <\/span><\/span><\/p>\n Q-O-Q CPC declines were largely driven by FX.<\/span><\/span><\/p>\n TAC 26% of total ad revenue.<\/span><\/span><\/p>\n An ad exec is on to discuss new ad categories:<\/span><\/span><\/strong><\/p>\n Search – Will continue adding features like pictures and videos to search beyond just text given encouraging early results. CTR up as much as 30% to 40% when features like this are included.<\/span><\/span><\/p>\n Display – investing in platform (doubleclick), ad exchange, content n\/w, and YouTube. New Doubleclick version for publishers makes it easier for publishers to manage inventory. Doubling down on the ad exchange. Yields have been much higher for publishers versus ad networks (as much as 100% better in some cases). Real-time bidding has been especially strong.<\/span><\/span><\/p>\n Mobile – increasingly important. Rolled out new formats specifically for mobile. This includes “click-to-call” (automatically call the listing on your smartphone from the ad). Working well.<\/span><\/span><\/p>\n On products:<\/span><\/span><\/strong><\/p>\n Diving right into location-based products (we think this is going to be a big focus for the company the next year or so).<\/p>\n “Near-me-now” – mobile product. turns your location essentially into a search query (show things of interest closest to you).<\/span><\/span><\/p>\n Android now powering 34 devices from 12 different OEMs. <\/span><\/span><\/p>\n Chrome growing well too. New translation tool released this quarter that can translate any page into pretty much any language. Translating 60 million pages per day.<\/span><\/span><\/p>\n Q&A:<\/span><\/span><\/strong><\/p>\n On domestic vs international: Seeing better recovery in domestic than overseas, especially large advertisers. But comps are much easier for international.<\/span><\/span><\/p>\n On Nexus One: Its is profitable, but won’t give specifics.<\/span><\/span><\/p>\n CPCs: They were hit somewhat because they are selling more long-tail keywords. So, overall rev is up, but that may explain some of the softness in CPC.<\/span><\/span><\/p>\n Dodging the Apple search question.<\/span><\/span><\/p>\n On Social Network Competition To Google Long-Term: Don’t see things as a zero sum game (read: they will do well, so will we). Right now not seeing any impact to results. On Nexus One Sales: Not disclosing the number, but “very happy” with uptake so far. Also, no comment on selling them in stores in addition to online.<\/span><\/span><\/p>\n China: Rev #s were immaterial, no real information beyond that. A “tough decision.” Still opportunities there for ad sales team and search in Hong Kong. AdMob deal will likely go through, company is confident. If for some reason it doesn’t, the company still has Google AdSense for mobile.<\/span><\/span><\/p>\n Stock down 5% in after-market, investors appear disappointed. Here are the key consensus estimates. A full “cheat sheet” is below.<\/p>\n Key Consensus Estimates:<\/strong><\/p>\n PREVIEW<\/strong><\/p>\n Google (GOOG) reports Q1 2010 earnings after the close on Thursday. We’ll be analyzing the earnings live here starting at 4 PM EST.<\/p>\n The Bottom Line:<\/strong> Anecdotal reports have suggested that the recovery in search advertising has continued in 2010, so analysts are expecting modest upside to consensus estimates.<\/p>\n Google’s stock has drifted up for the past six weeks, but has lagged the market, in part due to the company’s decision to pull out of China.<\/p>\n Google will likely need to significantly<\/em> beat estimates for the stock to rise on the announcement.<\/p>\n Background:<\/strong> At $589, GOOG shares are trading at about 22-times 2010 estimated EPS. This is below historical highs of around 30-times, but still pretty pricey versus the overall tech group. As a result, the company will need to consistently beat expectations this year (and soon demonstrate it has plans for a new growth engine beyond search) to see material multiple expansion.<\/p>\n Key Consensus Estimates:<\/strong><\/p>\n Here is an excellent snapshot from Citi analyst Mark Mahaney (click to enlarge<\/a>):<\/p>\n Join the conversation about this story »<\/a><\/p>\n See Also:<\/b><\/p>\n Here’s the release… Bottom Line: Solid quarter, in line with expectations. Nothing to hyperventilate about. As expected, the stock is trading off in the after-market. Revenue was slightly above consensus, as was EPS. Both numbers were in line with whispers (and investors were hoping for more). Paid clicks and revenue per click both grew nicely, […]<\/p>\n","protected":false},"author":6777,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-529216","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/529216","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/6777"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=529216"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/529216\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=529216"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=529216"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=529216"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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