Google Tops Lowered Earnings Expectations

Google (GOOG) topped first-quarter expectations with GAAP earnings of $4.49 per share, 28 cents better than the consensus estimate. Revenues were also well above the average forecast, totaling $5.51 billion versus forecasts for $4.16 billion.

The numbers represent a true surprise given recent trends. Over the past 30 days, 7 brokerage analysts had lowered their first-quarter projections, causing the consensus earnings estimate to fall by 5 cents to $4.21 per share. Furthermore, GOOG has missed estimates 5 times in its brief history as a publicly-traded company.

Though the initial reaction to the announcement is positive - shares are up in after hours trading - the numbers need to be viewed in context. Rather than deliver truly good news, Google simply performed better than feared.

Revenues decreased 3% from the fourth quarter as the economy hurt ad revenues. Though the number of paid clicks increased, advertisers appear to have bid less for search terms.

Full-year forecasts had been declining throughout this year. Today’s announcement could reverse that trend. However, the stock has not successfully traded above $400 since last October, and it is unclear whether today’s report is enough to propel the stock higher without a continuation of the broad market rally.

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