Google is expected to deliver its Q3 2008 earnings call tomorrow, and the pundits are already bracing for bad news. Many expect Google’s results to miss Wall St. estimates, and that can’t be good for a company whose shares have fallen 24% in the third quarter, and are down a full 45% for the year. No matter how sunny the outlook displayed by CEO Eric Schmidt, who just last month said Google was seeing no impact from the financial crisis, Google can’t completely escape the current economic environment.
On top of that, Google specifically is hurt by certain factors, including the strengthening dollar, which tends to hurt companies like Google that make a fair share of their revenues overseas, and the increased regulatory scrutiny due to its pending ad-sharing deal with Yahoo. As Barclays Capital analyst Doug Anmuth says, as he ticks off eight points Google needs to clarify during the call:
“While we understand the strategic benefits for Google of an independent Yahoo, we are not sure the search deal is worth the more intense scrutiny that will accompany it.”
The one sunny spot: Google is considered one of the top 2 Internet companies (the other being Amazon), and while it’s stock has taken a beating lately, so has everyone else’s.
As the Wall St. Journal says:
Analysts generally believe Google remains in a good position relative to other Internet companies. However, poor economic results would likely hit the technology companies hard, be it in advertising, search or information technology spending. “In an economic slowdown you have to figure that on the corporate and consumer side that tech spending has slowed or will slow,” says Art Hogan, chief market strategist at Jefferies & Co.
So while analysts don’t single out Google as in particularly dire straits, they do tend to view it as a strong bellwether of the overall Internet marketplace. With the tech industry in general taking a beating in the stock market, here’s hoping Google’s earnings call dispels a little of the gloom.
