"Google Earnings: New Ad Details, R&D and Other Areas to Watch"

Quoting from the site wsj.com 

Posted by:Dr Ahmed.M.Shaban

Google will lift the kimono a little when it reports second-quarter results Thursday, revealing new details about its advertising business on its own sites, such as google.com and youtube.com, and on other sites where it places ads.

Until now, Google has reported two numbers about ads: how many clicks the ads draw and the average cost per click. It doesn’t reveal the actual numbers, just the change from the prior quarter and year.

Now, after some prodding from the Securities and Exchange Commission, Google says it will report the figures separately for its own sites and its network of sites.

Analysts expect the breakdown will show strength on Google’s own sites. Citigroup analyst Mark May estimates the number of clicks rose 28% on Google sites in the second quarter, compared with a year earlier, but just 10% on network sites.

Prices held up better on Google’s sites, too. May says the price per click on Google sites averaged $1.84 in the second quarter, versus $1.33 for network sites. He estimates prices declined 5.5% on Google sites, and 6.5% on network sites.

“Google has nothing to hide on its core business and that’s probably why they want to break it out – to show that their core business continues to be relatively strong,” said Ron Josey, an analyst at JMP Securities.

Overall, analysts expect Google to post earnings per share excluding certain expenses of $6.23, up 30% from a year earlier, on an 11% increase in revenue, to $15.6 billion, according to S&P CapitalIQ.

Google will report results after regular trading hours. It will host a conference call for analysts at 4:30 p.m. ET, which we will live blog here in Digits. Here are some other things investors will be listening for.

The Checkbook: Investors and analysts will be looking for updates on Google’s spending. The company has been plowing a lot more money into research and development, real estate, new businesses like Google Fiber, data centers and other technology infrastructure.

In the first quarter, operating costs jumped to $5.34 billion from $4.07 billion a year earlier. A big chunk of that was R&D spending, which rose to $2.13 billion from $1.62 billion.

Capital expenditures, to build and stock data centers, for example, nearly doubled to $2.35 billion from $1.2 billion. The company said in April that it planned continued “significant” capital expenditures.

The Android Ecosystem: Investors will also be on the lookout for clues about the profit stream from app sales on devices running Google’s Android mobile operating system. The Wall Street Journal reported in June that Google now keeps close to 30% of such sales, up from 5% in 2010. Google has gained leverage to extract a bigger share of sales thanks to the momentum of Android, which powered four of five smartphones shipped globally in 2013 according to Strategy Analytics.

Google said at its June developer conference that it paid “more than $5 billion” to developers in the 13 months prior. If the company kept 30% of app revenues, that would imply a roughly $2 billion contribution to the search giant’s top line, likely making app sales Google’s largest source of revenue outside of advertising.