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Market Update

After the Bell: Google Earnings on Tap

The firm's advertising business and proposed Motorola Mobility buyout may be under scrutiny.

Internet giant  Google (GOOG) reports third-quarter earnings after the stock market closes Thursday. A poll of Wall Street analysts forecasts that the firm will post earnings-per-share of $7.59, compared with $6.72 in the year-ago quarter.

Investors will want to hear more from CEO Larry Page about how the advertising business fared and whether it has been affected by the recent softness in the economy.

The company's margins in the wake of its proposed $12.5-billion takeover of  Motorola Mobility  may also be a point of contention for analysts, as hardware is far less profitable than Google's software business.  In an August note, Morningstar analyst Rick Summer wrote that the deal was defensive in nature, as Google works to mount a credible strategy to protect the Android ecosystem from intellectual property lawsuits. However, Summer noted that he has broader concerns about Google's capital allocation. "Although we understand the need for a stronger legal strategy related to Android, we are skeptical that the baggage of a no-moat handset business is worthwhile," he wrote. "We would be concerned if large deals like this became a recurring theme."  

Google may also update investors on the number of users for its recently launched Plus social-networking service, which competes with leader Facebook.

Google shares are up about 2.5% over the trailing three months, but still trade at a discount to Summer's $720 fair value estimate.

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