Google: Dollar Rally to Drag on Q3 Results

August 25, 2008 at 11:11 am PT

Google’s (GOOG) third-quarter results will feel the effects of a strengthening dollar, Collins Stewart analyst Sandeep Aggarwal observed in a research note this morning. Aggarwal points out that currency has lifted earnings in each of the last 10 quarters, but that the company will suffer a sequential FX loss in Q3, with the year-over-year benefit “materially lower” than in recent quarters.

Aggarwal says trend reversal in FX “will put $22 million” of “negative pressure on Google’s gross margin” on a sequential basis, and will provide only a $132 million boost on a year-over-year basis, versus $248 million in Q2 and $202 million in Q1.

Aggarwal, who maintains a Buy rating and $615 price target on the stock, says that the currency shift “is not a thesis changer, but a noteworthy trend reversal to watch for.”

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Tagged with: Collins Stewart, currency, dollar, Eric Savtiz, frontpage, FX, Google, gross margin, Sandeep Aggarwal, third quarter

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http://www.shawndrewry.com Shawn Drewry

I heard something about google giving up free dinners for their google employees and wanted to know how true that was….

http://www.ShawnDrewry.com

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