By Benjamin Pimentel, MarketWatch
SAN FRANCISCO (MarketWatch) — Google Inc. will report results Thursday, with Wall Street expecting substantial profit and sales gains, while anticipating some weakness in search revenue.
Google
/quotes/zigman/93888/quotes/nls/goog GOOG
+1.45%
is scheduled to report first-quarter results after the market closes on Thursday.
The Mountain View, Calif.-based company is expected to report a profit of $9.64 a share, on revenue of $8.1 billion, according to a consensus survey by FactSet Research.
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That's an improvement from the year-earlier period when the search giant reported an adjusted profit of $8.08 a share, on revenue of $6.5 billion.
Analysts generally expect the Internet powerhouse to post in-line results, highlighting steady gains in its mobile business. Google stunned Wall Street in January when it reported earnings that fell below consensus estimates.
No surprises are expected this time.
"Our channel checks point to another quarter of solid revenue trends for Google," RBC Capital analyst Ross Sandler said in a note. "Google continues to make considerable strides in both display and mobile areas."
ThinkEquity analyst Ronald Josey also said in a note that checks show "search trends have been solid" in the quarter, adding, "We believe Google's newer businesses like mobile and display continue to take share."
Josey did note several potential hurdles for the company, including the possibility of "continued headwinds around cost-per-click declines."
Cost per click refers to the prices paid for Google's online advertising.
In fact, Susquehanna analyst Herman Leung in a note said research data show Google cost-per-click pricing could be down 20% sequentially in the first quarter. That would be a bigger dip than the 13% quarter-on-quarter decline in the fourth quarter.
He cited seasonal factors as one of the main reasons. Leung also highlighted the impact of the "shift to more mobile oriented searches."
"People are just spending more time on the smartphone these days," he said in an interview. Cost-per-click pricing is lower in mobile advertising.
There's also the steady growth of advertising in emerging economics such as Brazil and China, to what Leung said were "faster growth but lower monetizing areas."
In fact, analysts also will likely key in on Google's gains in the mobile market, where it has been moving aggressively to establish a stronger presence.
A key focus will also be Google's pending merger with Motorola Mobility.
Google is also seen facing risks with its pending merger with Motorola Mobility, which some analysts have warned could disrupt relationships with device manufacturers who may look for alternatives to Google's Android platform.
Chief Executive Larry Page, in a letter posted last week on the Google site, said the company was excited "to build great devices" based on Motorola's technology and Android platform.
But he also stressed, "Android was built as an open ecosystem, and we have no plans to change that."
Needham analyst Kerry Rice underscored Android's importance for Google saying in a note that the operating system's "momentum continues to roll with an annualized run rate of nearly $4 billion."
Android, he added, "should continue to be the primary growth engine for Google's mobile advertising and app revenue."
BGC Partners analyst Colin Gillis also raised concerns about the Motorola deal saying in a note that the pending acquisition "could raise operational challenges for Google in the hardware space including slower growth and lower margins."
Google, he added, "continues to increase expense faster than revenue and margin compression remains an issue."
/quotes/zigman/93888/quotes/nls/goog 
US
: Nasdaq
Volume: 2.20M
April 11, 2012 4:00p
Market Cap
$203.82 billion
Benjamin Pimentel is a MarketWatch reporter based in San Francisco.
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