The Google factor for investors

Tomorrow, Google reports its first quarterly financial results as a public company.

In a report today, the Wall Street Journal says there’s little agreement on what those results will be.

Financial analysts’ estimates for Google’s third-quarter earnings, excluding several expenses, range from 22 cents to 61 cents a share, according to Thomson First Call, the Journal says. For 2005, the range of earnings estimates is equally dramatic: from $2.01 to $3.88 a share.

The reason for the broad spread? Google refused to offer financial projections during the preparations for its initial public offering of stock in August, breaking with Wall Street practice and annoying some institutional investors. Executives aren’t expected to be any more forthcoming tomorrow. Co-founders Sergey Brin and Larry Page said in the prospectus that they would run Google unconventionally, particularly when it comes to financial forecasts. “Although we may discuss long-term trends in our business, we do not plan to give earnings guidance in the traditional sense,” they wrote in their folksy statement, citing investor Warren Buffett as inspiration.

As a practical matter, Google’s stance leaves analysts and investors scratching their heads about what to expect from the company.

Some analysts have speculated that Google’s secretive ways are rubbing off on its peers. James Preissler, associate director of research at Majestic Research in New York, said Yahoo executives “seemed more evasive” on a conference call with investors last week following release of the quarterly results. He added, “It might be the Google factor.”

Wall Street Journal | Will Google Finally Reveal Itself? (subscription required)

Update 21-Oct-04 via Google posted third-quarter net income of $52 million, or 19 cents a share. That compares to $20.4 million, or eight cents a share, in the year-ago quarter, before shares of the company were traded publicly. Revenue also more than doubled to $805.9 million from $393.9 million a year earlier. The company reported its results after the close of NASDAQ trading on Thursday.