Google Inc, International Business Machines Corp. Q2 Previews

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Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) is set to post second-quarter 2014 results on July 17th after the market close. In a report dated July 16, 2014, Goldman Sachs analysts Heather Bellini, Shateel Alam and Justin Rowley are expecting total revenue of $15.6 billion and non-GAAP EPS of $6.13.

Google results expected mostly in-line

Analyst’s revenue estimate is in-line with the consensus while EPS is below the consensus of $6.25. Non-GAAP operating margin is expected to be 32.9%, which is lower than the consensus estimate of 33.0%. Net advertising revenue for Google is forecasted to be $10.7 billion, which is marginally less than the consensus estimate of $10.8 billion.

The Consensus estimates, for the second quarter of 2014, is 19% year over year growth in the net advertising, which is in-level to previous quarter growth rate. Advertising revenue is expected to be strong in the second quarter. Also, the report says, “the consensus from our field checks was that search spend tracked in line with expectations, although no material acceleration was called out versus 1Q14.”

Cost per click (CPCs) could show “steady improvement” due to the narrowing price gap between tablets and desktops, but smartphone pricing can grow from the current scenario. Operating expenditure of Google increased in the first-quarter by 8% quarter over quarter and -3% in the first quarter of 2013, which Google said was due to the one-time cost associated with the Nest acquisition and legal fees.

Analyst cautious on IBM

Another tech giant, International Business Machines Corp. (NYSE:IBM) is also set to post second-quarter result on July 17th after the close of trading, where the analysts are expecting drop in the revenue due to currency headwinds and slower demand from growth markets. On the top of that an under-performance of the system and the technology division would, also, hurt the results as the segment is seeing low sales volume, product transitions and market disruptions.

In the first-quarter, revenue dropped 3.9% year on year to $22.48 billion. Net income declined 21% to come in at $2.38 billion primarily due to workforce restructuring that affected the bottom line by $870 million. Software business of the company posted low-single digit growth, owing to 5% year over year growth in the middleware revenues, its Global Technology service revenue dropped by 1% specifically due to the negative effect of the sale of the customer care business process outsourcing services business in the fourth-quarter 2013. The Cloud Computing and analytics initiative have enhanced Global Business Service division revenues, which surged 2% year over year in the first quarter.

IBM is expected to continue with revenue growth of the software segment’s and GBS divisions in the second-quarter.

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