How Bad Was Google's Quarter?
. (His prior estimate was for 5 percent growth). Khan also revised his pro forma EPS estimates down 5.5 percent from $5.04 to $4.76. — What's got him spooked? Through February, comScore is showing declines in U.S. search activity (measured in query volume) …
Context & Ripple Effects
The question of whether Google's search growth was real predates this quarter: comScore's click data set off a sell-off scare back in April 2008, and by that August TechCrunch was asking directly whether Google had an organic growth problem. What has changed entering April 2009 is that the recession turned that measurement dispute into an earnings call: comScore's own February analysis attributed shifting American search behavior to household financial stress.
Now comScore shows U.S. search query volume declining through February, and analyst Khan has responded by cutting his pro forma EPS estimate 5.5 percent, from $5.04 to $4.76, and lowering his revenue-growth assumption from a prior 5 percent. With Google's first-quarter print days away, the Street is repricing the world's largest search business off a third-party panel rather than waiting for the company's own numbers.
First-order effects
- Khan's downgrade resets the bar Google must clear when it reports first-quarter results, with his new $4.76 EPS floor implying analysts expect contraction rather than the growth modeled a cycle ago.
- Declining U.S. query volume through February puts paid clicks — the direct input to Google's ad revenue — in doubt weeks before the company can confirm or refute it.
Second-order effects
- comScore's framing that Americans are searching differently because of personal financial turmoil gives advertisers evidence that demand, not just supply, is weakening — leverage for negotiating cheaper search placements if click-based auctions soften.
- A single monthly comScore read now moves analyst models and stock expectations between earnings reports, increasing the measurement firm's influence over how the entire search sector is valued.
Third-order effects
- If panel data keeps front-running reported results, quarterly guidance loses signaling power and third-party measurement firms consolidate their role as de facto forecasters of the online ad economy.
- A recession-era pattern of judging search businesses on query volume rather than monetization pushes the industry toward demonstrating per-click value — a structural test of whether search ad pricing can hold as usage flattens.
The trend: Wall Street is increasingly trading search-advertising giants off third-party query and click measurements, turning comScore-style panel data into a leading indicator for the online ad economy.