Guesitmation on Google's 3q09 results

=> let's see who's guess is more accurate, Bilibala or Wall Street.
=> Bilibala's guess on 3q09 adjusted EPS is US$5.63

By John Letzing, MarketWatch

SAN FRANCISCO (MarketWatch) -- Google Inc. is expected to post gains in profit and sales when it reports third-quarter results after the market's close next Thursday, as the company is expected to benefit from a preference for online search advertising during the downturn, and from a concerted effort to cut costs.

Analysts polled by Thomson Reuters estimate Google
(GOOG 519.14, +4.96, +0.97%) will report earnings excluding special items of $5.37 a share for the period ended in September, and $4.2 billion in net revenue.

That compares to earnings excluding items of $4.92 a share, and $4 billion in net revenue in the same period last year.

Google's mainstay of online search advertising has suffered recently alongside the broader advertising market -- though it's also generally proven more resilient. Meanwhile, the company has continued to garner a much larger audience for its search service than its peers.

"We continue to believe that Q2 may have been the trough fundamentals quarter for Google on a reported trends basis, hence the positive outlook for Q3," Citigroup analyst Mark Mahaney wrote in a note to clients Tuesday.

According to recent data from comScore Inc., Google had a 69% share of the international search market in August. Yahoo Inc. (YHOO 17.03, -0.55, -3.13%) had a 6.7% international market share, according to the data, while Microsoft Corp. (MSFT 25.60, -0.08, -0.29%) captured 2.3%.
As the economy makes an anticipated recovery this year, Google's search advertising business is expected to benefit -- though timing remains unclear.

Soleil Securities analyst Laura Martin told clients in a note published Wednesday that she recently lowered her estimate for Google's revenue in the third quarter by 2%, thanks to "an economy that is improving at a slower rate than we had previously projected."

However, Martin also acknowledged recent cost cutting at the Internet giant, and lowered her estimate of expenses in the quarter by 5%.

Justin Post of Bank of America/Merrill Lynch agreed that cost controls will likely benefit the company's bottom line. "We expect Google to continue to find cost efficiencies so we would expect revenue upside to flow to the bottom-line," he wrote in report Monday.

Google delivered earnings results in July that topped Wall Street estimates, thanks largely to cost cutting. Google executives told journalists in New York earlier this week that they've sought to reset expectations among employees for perks and other benefits, according to media reports.
Recent data cast some doubt on the health of the Internet advertising market as a whole. The Interactive Advertising Bureau and PricewaterhouseCoopers LLP released a report earlier this week estimating that total online advertising revenue in the U.S. fell roughly 5% in the first half of this year.

Still, the report noted that search advertising actually rose slightly to $5.1 billion for the period. See related story.

Google's rate of so-called paid clicks, or the number of times users click on advertisements and generate revenue for the company, has tailed off of late, however. And the average price paid by advertisers, or cost-per-click, has flagged recently.

Brigantine Advisors analyst Colin Gillis told clients in a recent research note that a 5% to 10% increase in Google's cost-per-click rate in the third quarter compared to the prior period would be an "outstanding" result. Lower than 3% growth would be "disappointing," Gillis wrote.
Paid click growth, meanwhile, should "return to a positive range," Gillis wrote.