Earnings Preview: Google, Media General Offer First Taste Of Q109 Results
This story was written by Rory Maher.
Next week, the first batch of media, internet and entertainment companies will reporting first-quarter 2009 results, and just about all the focus in the digital-media community will be on the state of online advertising revenue, particularly whether there are any signs of even a modest recovery ahead. Fourth-quarter 2008 earnings showed that display had fallen off a cliff and wasn't likely to bounce back in the first quarter of 2009, while search held up fairly well in comparison.
Also, results from traditional media companies will show whether new-media companies continued to eat away at their market share during the quarter. Next week, online behemoth Google (NSDQ: GOOG) reports, which should be a good indicator for search advertising in general, since Google essentially owns that patch. Media General (NYSE: MEG) also reports its results, providing a peek into the continued challenges faced by newspapers and TV stations in what is shaping up to be the worst year on record.
More detail on Google and Media General, after the jump
-Most analysts expect Google to report revenue around $4.1 billion, earnings-before-interest-taxes-depreciation &amortization (EBITDA) of $2.4 billion, and EPS of $4.79. This implies global paid-click growth of about 15 percent and revenue-per-click declines of about 10 percent. Since Google commands over half of all paid-search ads, results that are better or worse than those expectations should shed some light on what to expect from rivals Yahoo (NSDQ: YHOO) and Microsoft (NSDQ: MSFT). Perhaps more importantly, the company may provide details on how second-quarter results are comparing to first-quarter results thus far. Most expect online ad revenue to stabilize somewhat during the second quarter, so Google's guidance will be an important measure of whether industry expectations have been too optimistic.
Media General is the first traditional media company to report earnings (it owns newspapers and TV stations). Though there is little analyst coverage of the company, it did say on its fourth-quarter 2008 earnings call that indications were that print revenue would not decline at a steeper rate in the first quarter of 2009 than in the fourth quarter of 2008 . Watch for surprises in either direction. (I don't think it would be surprising to see newspaper results come in worse than expected.) Note: The company's TV results may not be entirely indicative of the overall industry since one of its larger TV stations likely benefitted from increased advertising around the Super Bowl.
By Rory Maher