We’ll see if Google (NSDQ: GOOG) shares get clipped as badly in today’s trading as they did after hours yesterday… so far it looks like justice may be a bit less severe. Either way, it was not one of its great quarters. The key question: what does it mean for its long-term outlook? Analysts are chiming in with their view, and most remain pretty positive:
— Doug Anmuth, Lehman: The online ad market is showing cracks, no doubt, between Google, Microsoft (NSDQ: MSFT), ValueClick (NSDQ: VCLK) and BankRate, but Google is in the best position of all. He noted that Google’s income fell short in part due to lower interest income on its cash pile (which was noted in the release and discussed further in the call).
— Jeff Lindsay, Bernstein: “Given the current macro environment, and the fact that the second quarter is typically the weakest from a revenue growth perspective, we thought this was actually a good performance. Unfortunately, more than a few investors did not agree.” Key hits: Viacom (NYSE: VIA) legal expenses were big in the quarter. Most of the cost lines grew slower than revenue, which is good. Lindsay notes the gap between O&O revenue growth (42 percent) and network revenue growth (22 percent): “We think that this differential confirms our thesis that paid search on Google’s own AdWords system is highly recession-resistant but Google’s advertising network that serves text and now display ads on network partner sites is feeling the impact of the slowing macro-environment significantly more.” More after the jump.
— Ross Sandler, UBS: “Overall, the positives outweighed the negatives, and we believe that the aftermarket sell-off was overblown. Search is proving to be the most recession-resistant advertising medium, but we do not believe GOOG is totally immune, particularly if the 2H environment continues to deteriorate. Google remains our favorite long idea in domestic Internet, as the core business continues to gain share and the company has option value in its display/mobile businesses.”
— Mark May, Needham: “Poor after mkt trading did not reflect the reality of Google’s 2Q08 results, which were in-line with rev and above EPS expectations when normalized for lower than expected non-operating interest income.”
— Ben Schachter, UBS: Google could’ve done a better job clarifying its view on the economy and its impact: “While the company went to unusual lengths to highlight its relative strength in a weakening macro environment, we think simply by virtue of highlighting it, they may have created more confusion. The qualitative remarks from the company implied that they have yet to see significant stress from the macro environment on its business. However, it remains unclear just how relative the impact may be.”