Google earnings report: What to expect from the Silicon Valley tech giant

The internet company had a disappointing third quarter - but what's in store for the fourth quarter?

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The Independent Online

In the battle of the Silicon Valley giants Google has a tough act to follow when it announces its fourth quarter earnings.

This week Facebook posted strong profits, while Apple announced the best quarterly results ever achieved by a public company.

Google had a disappointing third quarter as operating expenses outstripped gains in a changing technological landscape.

Here are some things to look out for ahead of tonight’s results:

Can Google pull it out of the bag?
The internet company's shares tumbled after its third quarter results. This time around analysts will be focused on Google’s advertising revenue, which has been struggling because clients are reluctant to purchase ads that will likely be viewed on a smaller smartphone screen.

Google's paid clicks during the third quarter climbed 17 per cent from last year, but that figure was down from a 25 per cent year-on-year increase in the previous quarter.

So the question is – will this slide continue or are things on the up?

What kind of figures are we talking here?
Google should post growth on all fronts, according to an analyst forecast compiled by Thomson Reuters. The consensus estimate is for:

Revenue of $18.4 billion, up 9.5 per cent year-on-year

Pretax profit of $6.2 billion, up 26.5 per cent year-on-year

Net income of $4.9 billion, up 22 per cent year-on-year

 

Where does innovation fit in?
Google’s chief executive Larry Page refers to the firm's sometimes risky initiatives as "moon shots". These are experimental projects which, if successful, are potential game changers in the Google universe.

However, these ventures are time-consuming and expensive, meaning that research can take years to pay off.

When it all works out you end up with Android mobile software and the Chrome browser. And when it doesn’t you get Google Glass.

This means that profits can slip in the interim.

New and untested innovations that might get a mention in the results include Google Fiber, the company's attempt to provide people in selected US cities with super-fast internet connections, as well as its designs on providing a phone network.

Those aren't at the stage of generating any significant revenue for the company, yet - but they might one day, and Google could update us on how they're going during its results presentations.

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