Google Earnings Watch

Some of the main discussion points worth watching for on the Google earnings call tonight:

  • Any discussion of sectoral advertising weakness. Yahoo has people thinking that automotive and finance dragged their results down. If Google says those sectors performed, then someone is (likely) fibbing.
  • Capital equipment spending growth. For at least three quarters in a row now, and maybe longer, Google’s capital equipment expenditures (“CapEx”) has grown faster than revenues. That makes people very, very nervous.
  • Ad inventory glut. People will be watching for comments on rapidly increasing ad inventories driven by social network, YouTube, etc.
  • YouTube copyright liability. Universal’s suits this week, plus saber-rattling from Time-Warner, will have people wondering if Google has bought off more liability than it wanted with YouTube. Then again, as the Times is reporting today, Google shrewdly turned three of the major music companies (Vivendi, Sony BMG, and Warner) into Google shareholders in the current deal.
  • The $2.42 consensus number, of course.

Others? Feel free to add ‘em.

Related posts:

  1. The YouTube Warner Deal
  2. Google Buys Writely and the Calacanis Watch
  3. Google is “Among Suitors” for YouTube
  4. Google Q1 Comment: CapEx Line
  5. Google Page Creator ==> Google Tattoo Creator?

Comments

  1. Kyle S says:

    obviously they blew away the revenue and eps numbers… anyone listening to the call hear anything about capex yet?

  2. John K says:

    From the release – they say CAPEX is going to continue to grow faster then revenue… DUH :)

    Cash Flow and Capital Expenditures – … In the third quarter of 2006, capital expenditures were $492 million, the majority of which was related to IT infrastructure investments, including data centers, servers, and networking equipment.
    We continue to expect that the growth rate in capital expenditures in 2006 will be substantially greater than the revenue growth rate for the year.

    Larry Page (!) “answers” the first CAPEX question – says he won’t need more resources to deal with video, because they’ve got plenty o’ bandwidth.
    Eric blathers on about “economies of scale” – Moore’s law etc…

  3. John K says:

    Another question about it, Eric lectures that quote / unquote “over investment” 2 years ago allows them to be over-performing this year. He’s talking down to the analysts a bit, annoyed that they don’t understand the “invest in infrastructure” model.
    And George chimes in that Free Cash flow of $512 M allows them to “easily afford” the capital expenditures they are making…

  4. John K says:

    Since I live blogged a bit here in the comments, I feel like I deserve a link drop :)
    Here’s the rest of my take:

    Google Q3 2006 – Early Days of a Monopoly

    http://gotads.blogspot.com/2006/10/google-q3-2006-early-days-of-monopoly.html