Search engine giant Google, Inc. (GOOG) reported first quarter 2011 earnings after the closing bell today. Google’s earnings of $7.04 per share missed the Zacks Consensus Estimate by a dime, but revenues for the quarter came in at a healthy $6.54 billion — higher than the Zacks Consensus Estimate of $6.29 billion and even the most recent estimate of $6.38 billion.
Google shares had been up slightly in regular-day trading on Thursday ($2.23 per share, or 0.39%), but in the after-market have slid badly, over 5% and more than $29 per share. Even with net revenue gains of 29% year over year, the miss on the bottom line must be raising red flags to traders.
Over the past month, there has been downward pressure on Google shares, with 5 analysts having lowered estimate revisions for the 1st quarter, and 4 downward revisions for the 2nd quarter and fiscal 2011, as well. The $7.14 per share Zacks Consensus Estimate had come down 5 cents in just the past month, and the company couldn’t even come close to hitting that mark.
Other challenges pertaining to Google’s success in the coming quarters include a changing of the guard from CEO Eric Schmidt to Larry Page, the company’s involvement (or lack thereof) and its burgeoning competition in the Chinese market, and disruptions due to recent catastrophic developments in Japan.
This is now the second earnings miss for Google in the past four quarters. And being that it is the first earnings announcement with Page at the helm, questions may begin to swirl about the company on the management side. But one should not lose sight of the fact that Google has come a very long way in a short amount of time, and will continue to be a stalwart in the industry for a long time to come.
That said, the big question is: will Larry Page be able to find a new goldmine somewhere in its vast expanse of different kinds of business the way Schmidt was able to do with Internet search a few years ago? If so, it will mark another major tier in the relatively brief history of the company. If not, perhaps Google is destined to become another Microsoft (MSFT), ultimately still successful but unable to capture that elusive “next wave.”
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