GOOG earnings for Q4 Goog or not so Goog

Earnings are coming around the corner. Most people think that GOOG will beat their Q4 earnings target by a fair amount. Fourth quarter is seasonally the strongest quarter for GOOG.

This should be a piece of cake because Google has a way of always beating estimates by a fair margin.

Google actually missed Q4(05) by $.22. Let’s look at the targets and actual earnings for this year:

Q1 Posted $2.29

Q2 Target $2.22
Q2 Posted $2.49

Q3 Target $2.42
Q3 Posted: $2.62

Q4 Target: $2.89

What is wrong with this picture? Am I the only one who sees this? Every quarter this year the target has been lower than the previous quarter earnings except Q4 which is much higher. If a person went back last year the pattern is the same. Does this mean that GOOG is going to miss 4th quarter earnings? No, I am not going to say that GOOG will miss Q4. Actually the toughest target was for Q1 which GOOG beat by a fair margin. It would seem to go without saying that Q1 and Q4 are the best quarters. In the next posts in this series, I will explore "Revenue" and "Taxes and costs to revenue".


A quick teaser
At current consensus analysts are calling for a revenue of $2.18 billion TAC adjusted. Is this number reasonable? If this number is hit, GOOG could come close or even slightly ahead of EPS estimates? This will be dependent on taxes and costs.

Now, I am not trying to make a bearish statement but one has to understand that the Q4 target will be a tough target to surpass or make. I am not even trying to predict a miss. I will say the bar is at the highest point this year. If I were a risk adverse investor, I would not be long
through this earnings. This will be a thought provoking series because I have not seen this mentioned before.

GL investors

Disclosure: I am not currently long or short GOOG. I do have some speculative option plays on GOOG.

Note to all readers: This post and all other posts in this blog are for entertainment purposes only. All of the stocks Described are very highly speculative. Investing in the stocks mentioned could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.