Google (GOOG) reports after the close tomorrow (Thursday, April 19); GOOG expectations: $3.30 EPS & R$2.495 Billion; next quarter $3.42 EPS & R$2.64 Billion.

Google Internal Metrics:  Google does not offer guidance and now the street has two major deals to content with in forward numbers.  Late last year it consumed YouTube, and now it has started the process of consuming DoubleClick.  Google is in a pact to allow radio ad placements now with Clear Channel, and they already have tested "excess line ad and classifieds" placement at papers on an ongoing basis.  There is still talk of the Google Phone, so we’ll see if the recent reports get any confirmation.  We’ll also potentially get to hear just how the Google "Office" suite of word processor and spreadsheets are doing.  Google’s Checkout is still expected to not show much in contributions yet.  TAC (Traffic Acquisition Costs) have run 31% of advertising revenues in each of the last two quarters. Last quarter it said that ‘cost of revenues’ from data centers and credit card processing grew to 10% of revenues, up from 8% in the prior quarter.  It ended last quarter with $11.2 Billion in cash, but that should drop in the cming quarters after the DoubleClick acquisition. One last key metric to look at is HEADCOUNT, as some analysts watch this for "growth expectations": it ended with 10,674 employees last quarter, up from 9,378 the quarter before.

Google held up quite well today if you look at the fact that Yahoo! (YHOO-NASDAQ) stumbled on its earnings.  Shares are also being marginally helped by eBay (EBAY-NASDAQ), even if they aren’t really related in the direct operations.

If you read into the comScore search metrics from March, you’ll see that Google hasn’t really shown any signs of loosing its dominance in online search (it actually grew market share again).  In fact, Yahoo! actually fell at the expense of everyone else.  The overall search world is still growing; it grew 6% from February and 14% from March 2006.

                                                    Feb-07       Mar-07    
Total Internet Population       100.0%       100.0%      
Google Sites                             48.1         48.3      
Yahoo! Sites                             28.1         27.5   
Microsoft Sites                          10.5         10.9   
Ask Network                               5.0          5.2   
Time Warner Network              4.9          5.0   

Jon C. Ogg
April 18, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

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