Well, I'm stumped on this one in all 3 areas I look at - earnings, revenue and google sites revenue. I think there are some people expecting GOOG to do 40% more revenue than they did last quarter, seriously, because of seasonality. That would put revenues at 1.47 billion, much higher than the highest analyst exp of 1.37. I am not in that camp, but I think expectations like this are killing us. I am trying to be more realistic. Google is not a retailer like Amazon.
For earnings, I think I am looking for $2 or slightly over. That will give us our $10 2006 estimates I believe, UNLESS Google blows the conf call, but I think there is less likelihood of that because the Alexa charts are pointing to a better Q1 than Q4. (this is often the case btw, was last year- seems like Xmas is being pushed out a quarter).
Google Sites- this is the most important number.
For GOOG sites revenue, we have this trend,
Q1: 584
Q2: 630
Q3: 675 about a 7% increase q2/q3
so, up $45mm per quarter this year, every quarter. I think this rise is due to GOOG new products and there isn't any reason to think Q4 won't be the same, because yet more goog products were delivered. I am going to add another 10% to Q3 , mostly due to adoption of earth, local/maps and (the big one) FROOGLE-base. Froogle took off in q4 with base as the easy feed for sellers. The trick here is 1)how much was this number inflated last qtr due to Katrina and 2)how much seasonality is there now due to froogle.
It is possible that FROOGLE put a seasonal spin on this number and we are way over a 10% increase qtr/qtr. I will create a range 10% - 25% increase over Q3.
Q1: 584
Q2: 630
Q3: 675
Q4 estimate: 742-843 (range with assumption 843 is WAY HIGH)
Watch this number- if GOOG surprises here to the upside then the stock will rally irrespective of the partner program revenues. My guess is the analysts are looking for about 740.
Next revenues. I have estimates at 1.2 billion net of TAC. One wierd thing on yahoo is that it says the high estimate is only 1.37 billion with the low at 1.15, with the avg at 1.29. If the avg revenue estimate is 1.29 then the avg earnings estimate of yahoo is WAY TOO LOW. Not sure whats up with this.
Here is the trend. (btw these numbers don't quite match yahoo so I probably have a rounding error or there is something else included in TAC on the Google Fin page but I can't see what it is and not counting it)
2004 Q2: 700mm - 277mm = 423mm
2004 Q3: 806mm - 303mm = 503 mm = 19% increase from Q2
2004 Q4: 1.03 b - 378 mm = 652 mm - 30% increase from Q3
2005 Q1: 1.256 b - 461mm = 790 mm - 21% increase from Q4
2005 Q2: 1.384 b - 494 mm = 890 mm - 13% increase from Q1
2005 Q3: 1.578 b - 529 mm = 1.05 b - 17% increase from Q2
Q4 estimates 1.29 b which would be a 22% increase from Q3.
This is a tough estimate. Obviously every Q4 is quite a pop from Q3, due to seasonality.
A 22% increase which is avg estimate seems high for an average exp, except we are going from the "slow" season to the "high season". The one worry I think many have is whether GOOGs Q3 took some of the thunder out of the Q4 increase- except, Comscore and others are not saying that. So what to do.
I've already said the Google sites revenues are going up 742-843mm. Lets say 760mm for a wag.
TAC went from 303-378 from Q3-Q4 2004, or a 24% increase in partner revenue. This is a total wildcard. Last year the partner programs were in a nascent growth stage and there was no competition. This year we have YPN as competition but yahoo really sucked with their numbers on the CC. Whether that is because the partner programs are saturated or GOOG took all the business we don't know.
This is a total WAG, but I am going to say partner revenue increases 40% qtr/qtr for GOOG. I think the partner sites are more seasonal and GOOG took a lot of business. I have talked to some google partners who actually told me their partner payouts were 60% higher this quarter than last. Of course that isn't the norm so you can't count on it and I think some blogs experience negative-seasonality.
We know partner revenue in Q3= 1.05 b - 675 g sites = 370mm. So 370*1.4 = 518mm revenue.
So my conservative estimate on Q4 total revs for goog = 760+518 = 1.27 billion revenue , thats my guess.
If goog does 1.2x - 1.3 billion revenue with google sites in the high 700k range, they should be able to make a great earnings number at $2. I don't know why the sandbagging of earnings with revs like this.
Hey what the heck do I know though, maybe my partner contacts are right and GOOG will do 1.47 billion and blow everyone out of the water. Lets hope
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