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Yahoo Staffer Predicts Google Fall

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One diviner of the inscrutable GOOG has peered out from the Yahoo enclave in Sunnyvale and forecast a dire fourth quarter earnings report from Google.

It’s all in the search advertising details, we find out from Yahoo senior software engineer Amr Awadallah, cited by SiliconBeat’s Matt Marshall in his recent post. Awadallah thinks Google has given away some signals that indicate a lackluster earnings announcement will be delivered by Eric Schmidt and company on January 31st.

Awadallah picked up on a few indicators he thinks bode poorly for Google. First he detailed how changes in the third quarter delivered booming numbers for Google. He listed those changes as Google adding three sponsored links about certain search results, increasing top of the page coverage significantly, and variable term pricing in AdWords, where minimum max-bids for keywords were set “on a per-term basis, rather than a flat” 5 cent minimum.

He then ticked off four factors that could contribute to a fourth quarter report that misses analyst expectations: Yahoo Publisher Network’s emergence from beta; Google’s capital spending excesses, nearly double those of Yahoo; hiring at a faster pace (Awadallah suggests Google is hiring lower quality applicants, too); and an increase in Google’s cost of revenues through 2005 that diminished its operating margin slightly.

“In summary, if you have been thinking about selling/shorting google, now might be a very opportune time,” he wrote.

Google recovered a bit from Friday’s selloff, when news of a Department of Justice subpoena against Google spurred a number of investors to dump their stock and send prices below $400 per share. The 8.5 percent drop turned into a 7 percent gain on Monday, with a close of $427.50.

Given Wall Street’s swift punishment of Yahoo and Intel for delivering financials out of line with market expectations, Google could face a brutal Wednesday morning on February 1 if it doesn’t delight investors with its figures.


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David Utter is a staff writer for WebProNews covering technology and business.

Yahoo Staffer Predicts Google Fall
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