Did you hear that giant exhaling sound? The technology industry just let out a huge sigh of relief after Google beat profit expectations in its Q3 earnings announcement.
“Net revenues of $4.04 billion were dead-on with analysts’ estimates, and profits before special items was $4.92 a share, handily beating expectations. The big reason: It reined in expenses, hiring fewer people and actually cutting capital expenses from a year ago.
Analysts had forecast $4.80 in earnings per share, minus special items such as stock option expenses, on net revenues of $4.05 billion after payments to partners that run Google ads on their sites. However, many analysts were informally assuming Google might come in slightly below their stated estimates and have been reducing estimates and price targets in recent weeks. A year ago, Google earned $3.92 a share.”
On the conference call, Google execs were very reluctant to make any forward-looking statements about the state of the economy or how it would impact Google. My sense is that NO ONE KNOWS exactly how the recession is going to impact online advertising. So there’s no sense in speculating, especially when the answer is probably negative.
That means we’ll just to wait and see fourth quarter results before making any definitive judgments. The good news is that so far Google is showing an ability to grow during a slowing economy. That’s why the stock is now up 10% in after-hours trading to $387. But of course, the economy has gotten much weaker since the end of the third quarter, and the full impact of the financial crisis has yet to be felt in the broader economy.
So it’s too premature to say the worst is over. But the tech industry did dodge a hail of bullets today. If Google has missed profit expectations, the Nasdaq would get crushed tomorrow. Now, Google earnings may provide some additional momentum for this afternoon’s last-hour rally.