January 23, 2007

Prediction for Q4-2006 Google Quarterly Earnings

Posted in Category: Work — Amr Awadallah @ 11:02 pm | link | | comment (0)

I cant believe it has been a year already, about this time last year I made the following blog posting predicting Google’s first miss:

Google will miss 2005-Q4 quarter revenue estimates

That blog posting was picked up by many folks, like Silicon Beat, John Battelle, Caterina Fake, Ken Norton (whom now works for Google!), and even CNN Money.

There were many skeptics calling me names and stuff, but Google announced and they did indeed miss. They did great, very nice growth, just missed what the analysts were incorrectly expecting.

Well, ever since then it was very hard to predict correctly, either Google learned the lesson and started smoothing out their changes, or the analysts learned their lesson and became more realistic.

Q4 of 2006 is no different, it is very hard to predict what is going to happen. Wallstreet analysts are expecting Google to deliver 18% sequential revenue growth. I think 18% might be hard to meet, since Comscore said that Google US Search PVs only grew by 8% from Q3 to Q4, hence that extra 10% has to come from improved RPS, or international growing much faster than US.

I did not see any significant changes to Google’s user interface to deliver strong RPS gains, but then Google now has many “levers” to play with. For example, they might have increased the minimum CPC bids required for many keywords, or they might have increased the number of ads they show at the top of their SERPs (they now control the number of ads on a per user basis, users whom click less on ads, see less ads, users clicking a lot get more ads). These things are very hard to track.

I don’t gamble, but if I had to bet, I would bet that they will not exceed the 18% sequential revenue growth, we shall see next week.

— amr

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