Daily Tech Report

Results from ComScore indicate that paid clicks in the U.S. grew 2.7% YoY in March and 1.8% in Q1/08, down from 48% YoY growth in Q3/07 and 25% YoY growth in Q4/07. Analysts are expecting $4.52 in EPS on revenue of $3.61 billion for Google’s quarter. The key uncertainty will be what these results mean for the quarter – while Google has been concentrating on improving the quality of its clicks in order to improve the results for its advertisers (and as a result improving how much they are willing to pay for their slots), analysts are divided on whether they’ll see enough of an improvement to make up for the relative weakness in actual clicks. Google believes that they are relatively immune to a recession, because advertisers absolutely need them because it drives revenues for them – Google might actually be more important when times are tough. An IT company we spoke to recently did comment on the beauty of Google’s model in this respect – they never had to speak to a human but simply enter in their credit card information and they were able to see a measurable improvement in their sales funnel. The “good thing” coming into the quarter is that consensus has been falling over the past few months – it was $4.87 just 90 days ago, helping to build in some of the downside from the Comscore results through the quarter. From an investment perspective, I think the business is stronger than its ever been from a competitive perspective – buying market leaders on short-term turbulence, especially in uncertain times, does provide a buying opportunity in my mind. (Disclosure: I don’t own Google shares)