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Google Earnings: Calm Before the Storm
12 Apr 2012 EDT - CNBC.com
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Google is all but certain to deliver pretty good news when it announces results this afternoon. Unfortunately, for the online giant, this is one of those quarters where a downside surprise would matter a lot more than an upside surprise.

Let me explain. Last quarter was a rare miss for Google , so analysts are buzzing about how Google never misses twice in a row. (Which means if Google were to somehow miss twice in a row, Wall Street would freak out.) Consensus calls for $8.1 billion in revenue and $9.65 in earnings per share.

Mainly, we'll be scrutinizing Google's cost-per-click trends, which took a dive last quarter. Google management shrugged it off, saying the blame fell on foreign exchange rates, and the combined impact of a bunch of tweaks they made to ad formats. Okay — but if cost per click doesn't see any kind of a rebound, analysts will ask plenty of questions about what it means for Google's results long-term.

A couple of the analysts who expect an earnings beat think the upside comes, at least in part, from a modest improvement in cost per click.

But really? The bottom line is this is a first quarter, worth a couple billion less in revenue than the seasonally strong holiday quarter was. Even if it's a pretty good quarter, the impact will be limited.

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