Instant view: Google profit misses Street consensus

NEW YORK (BestGrowthStock) – Internet powerhouse Google Inc (Read more about Google Stock Analysis) reported higher quarterly revenue, but missed Wall Street’s average profit estimate on Thursday, sending its shares down 4.4 percent in after-hours trading.

Following are initial reactions of analysts and investors:

BRIAN PITZ, ANALYST, UBS

“Expenses seem a bit high, I think that’s what people are going to focus on. Across the board, R&D, sales and marketing, G&A. The question is going to be, how much money are they going to have to be putting in for new initiatives?”

COLIN GILLIS, ANALYST, BGC PARTNERS

“This was pretty much right in line with what we were looking for. There are positives in these numbers, CPC (cost-per-click) sequentially up 2 percent, that’s the typical seasonal bump up you get. That’s good, advertisers are still paying as much for the clicks, actually a little bit more.”

“They’re throwing more money into R&D than people were expecting and a little bit less into sales and marketing. Google has been pretty clear that it’s going back into investment mode. They added 1,200 people in the quarter, which means more expenses are going to kick in September.”

SANDEEP AGGARWAL, ANALYST, CARIS & CO

“We think basically that the cost per click didn’t go up as much as expected.”

RICHARD FETYKO, MERRIMAN CURHAN FORD

“I was pleased with the revenue coming ahead of expectations, driven by the strength in the U.S., which is ahead of expectations for everyone. The pricing of search and clicks in U.S. was better than I expected, and a reflection of search and marketing demand.”

“Even with the forex headwinds from international, they came in $100 million ahead of expectations.”

“Earnings were 6 cents light of consensus but they are hiring aggressively. They added 1,200 additional employees in the second quarter, versus 800 employees in the first quarter. This is a clear reacceleration of hiring. Operating expenses will continue to increase and margins will come down this year versus last year because their pace of hiring has reaccelerated, which may force analysts to lower their EPS estimates slightly.”

AARON KESSLER, ANALYST, THINKEQUITY:

“It missed my non-GAAP estimates but revenues looked a little better than expected. Research and development looked pretty high and general and administrative expenses were higher than I was expecting. Operating expenses overall were higher than we had estimated which dragged down the earnings per share.”

“Paid click was in line with our estimates. Revenue growth appears strong. clearly investors will focus on the continued increase in operating expense.”

ANDREW MIEDLER, EDWARD JONES

“It’s an impressive report from a growth perspective — pretty strong recovery in online advertising as they beat expected revenue with strength across the board.”

CLAY MORAN, THE BENCHMARK COMPANY:

“I would take it as a solid report confirming that Google is very much still a growth story and at the same time they’re back in investment mode and trying to invest in the future.”

(Reporting by Carolina Madrid, Sue Zeidler and Gabriel Madway)

Instant view: Google profit misses Street consensus