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Analysts Are Seeking Guidance From Google
Carl Bialik from WSJ writes "Following last quarter's disappointing earnings, Google's annual analysts' day this Thursday is shaping up as a test of the company's reluctance to provide financial guidance -- and of investors' tolerance of that tight-lipped approach, the Wall Street Journal reports. 'Now, Google watchers expect analysts to bring tough questions on Thursday and to pressure executives for answers that might give analysts greater confidence in their forecasts,' the WSJ reports. 'There's no reason to believe that Google will yield to any such pressures.' However, 'There is one recent sign that the company aims to be more analyst-friendly. Company representatives earlier this month solicited analysts for input on what investors wanted to hear about on Thursday, according to a person familiar with the matter.'"
Google blows away analysts' projections for the first three quarters of last year. Those analysts wise up and factor in some fudge, and suddenly their projections for the fourth quarter are much higher. Google fails to beat the inflated projections and is now suffering an investment backlash?
What gives?
How does providing specific profits and revenue guidance have anything to do with being more than a company that gets its revenue and profit stream from adwords? If Google provides guidance, it's not revealing the secret playbook to become the next Microsoft, it's estimating how many ads it will sell next quarter and year. Investors will learn nothing really new from this, other than a better idea of whether the Forward P/E is 40 or 20 rather than 32. Wall Street analysts, on the other hand, will get a nice benchmark for their own estimates, and get a pat on the head if their estimates are more accurate because of the guidance from google.
Who do you get to be an expert to tell you something's not obvious? The least insightful person you can find? -J Roberts