Yahoo! and Google Earnings Likely to Look Entirely Different

Google has long since blasted past Yahoo! and now is one of the biggest players in mobile telecommunications as well as searches. It has built its own Web browser and an operating system to compete against Microsoft Corp.’s (NASDAQ: MSFT) Windows, not to mention a suite of applications that compete against Microsoft’s Office. Founders Larry Page and Sergey Brin have pushed Google into new technologies. It has invested in developing an automobile that can drive itself and Google Glass, which lets the wearer see information about the people and things around them.

Yahoo! under CEO Marissa Mayer is trying to regain the momentum it had over a decade ago. It does not have a mobile operating system like Android. It is still third in Web searches, with an 11.2% share, behind Google’s 66.7% share and Microsoft’s 18.1% share.

Yahoo! is expected to report $0.38 a share in earnings on Tuesday, up 18.8% from a year ago. Revenue after payments to advertising partners, however, is expected to fall 1.6% from a year ago to $1.2 billion. Analysts see much improvement in the first quarter. Earnings are expected at $0.04 a share, down from $0.38 a year ago. Revenue is expected to show only a small gain to $1.08 billion.

Last year, investors bid up the stock 103%. That gain by and large reflects the Street’s valuation of Yahoo!’s stake in Alibaba, China’s largest e-commerce site. Alibaba is expected to file for an IPO this year, and Yahoo! would further benefit from the offering.

Yahoo! was off $0.65 to $36.26 in Monday afternoon trading. It is down more than 10% in January and sports a market capitalization of $37.7 billion. The stock-price decline may reflect some wariness about how much more the turnaround can continue to bolster the stock.

Google, on the other hand, has become a juggernaut, with a market capitalization of more than $370 billion, third largest in the world. Analysts expect earnings of $12.21 per share, up 15.3% from a year ago. Fourth-quarter revenue is seen jumping 37.8% to $16.8 billion.

Google’s stock was not as big a performer as Yahoo! in 2013. It rose only 58.4%. But that’s percentages for you. Google has learned to make lots of money, although the argument that today’s spending on Google’s future research projects is holding earnings back is becoming a real.

Stay tuned.