Now we get to find out just how good Google’s (GOOG) growth story is. Read three different analyst reports and you’ll get three different descriptions of Wall Street’s “consensus” estimates for the search giant’s Q3 numbers, out this afternoon. But Thomson Reuters thinks the Street expects earnings of $5.42 per share on revenue of $4.24, so we’ll go with that.

Here’s a more detailed breakdown of expectations, courtesy of Bernstein Research’s Jeffrey Lindsay. Note that per above, his description of consensus differs from the one at Thomson Reuters (click to enlarge):

More broadly, Wall Street expects to hear that U.S. ad dollars picked up in the last quarter, that international markets have as well, and that margins have held up due to cost-cutting, because Eric Schmidt has been saying all of those things out loud in recent days. Schmidt has also continued to talk up YouTube’s prospects for profits, so expect to hear about that this afternoon as well.

This morning, Goldman Sachs (GS) and Bernstein both had good things to say about the company, noting that investors may have underestimated its potential for growth. “Discussions with advertising agencies, including a dinner we hosted with senior agency executives, point to rising spending on Google since June, led by travel, clothing and home improvement advertisers,” Goldman said in a research note issued this morning.

Bernstein analyst Jeffrey Lindsay was similarly bullish. “We expect Google’s results to show some signs of cyclical improvement in Q3, as easier comparisons and more favorable currencies should benefit topline trends,” he wrote in a research note. “Paid search is an early cycle advertising format given the immediacy of keyword auctions, and Google has maintained its dominant position within the category.”

Also bolstering Google (GOOG) shares today are the recent comments of company CEO Eric Schmidt, who told journalists at a roundtable discussion last week that the economy is starting to turn around. “The worst is behind us and we clearly see aspects of recovery, and what is notable is we’re seeing aspects of recovery not just in the United States but also in Europe,” Schmidt said. “We are increasing our hiring rate and our investment rate in anticipation of a recovery.”

This morning, Goldman Sachs (GS) and Bernstein both had good things to say about the company, noting that investors may have underestimated its potential for growth. “Discussions with advertising agencies, including a dinner we hosted with senior agency executives, point to rising spending on Google since June, led by travel, clothing and home improvement advertisers,” Goldman said in a research note issued this morning.

Bernstein analyst Jeffrey Lindsay was similarly bullish. “We expect Google’s results to show some signs of cyclical improvement in Q3, as easier comparisons and more favorable currencies should benefit topline trends,” he wrote in a research note. “Paid search is an early cycle advertising format given the immediacy of keyword auctions, and Google has maintained its dominant position within the category.”

Also bolstering Google (GOOG) shares today are the recent comments of company CEO Eric Schmidt, who told journalists at a roundtable discussion last week that the economy is starting to turn around. “The worst is behind us and we clearly see aspects of recovery, and what is notable is we’re seeing aspects of recovery not just in the United States but also in Europe,” Schmidt said. “We are increasing our hiring rate and our investment rate in anticipation of a recovery.”

Be patient, says a new report from Bernstein Research, which predicts that mobile ads will reach $2.2 billion by 2013. That’s a decent chunk of change, but still a small portion of the estimated $32 billion that will be spent on Web ads that year. And for Google (GOOG) and Yahoo (YHOO), it won’t be nearly enough to provide a meaningful boost to their business.

Bernstein analyst Jeffrey Lindsay isn’t down on mobile, by the way. Just realistic. He argues, sensibly enough, that mobile Web use is different from the kind you do at work or home: When you go online via your phone, you tend to look for specific bits of information, then hop off, as opposed to endless surfing from your desk or couch.

Which means that even as people transition to phones with good Web browsers like the one on Apple’s (AAPL) iPhone, their mobile Internet time won’t replace the time they spend on their PCs, but just augment it. Translation: By 2013, Lindsay figures that mobile will make up about seven percent of Web page views. Click table below to enlarge.

What does this mean for Yahoo and Google, both of which have been talking up mobile as a big growth sector? Not that much, Lindsay says. He figures U.S. mobile ads could generate $300 million for Yahoo in 2013–about four percent of revenue.

And he thinks Google, which dominates mobile search in the same way it dominates the wired world, could generate $600 million–less than two percent of its revenue. Lindsay’s math (click to enlarge):

Not included in Lindsay’s analysis: Any mention of mobile ad opportunities specific to the app ecosystem Apple is creating. As I noted earlier this week, Apple has now pushed out two billion apps to iPhone and iPod touch users, and the majority of these could support ads if there’s a market for them.

[Image credit: mistress_f]

Wal-Mart is adding three outsiders to its sales mix, which it says will add an additional one million items to its inventory, and the company plans to add more in the future. Is this a problem for either Amazon (AMZN), which features some third-party sales, or eBay (EBAY), which offers nothing but?

Maybe one day, but not in the near future. That’s primarily because Wal-Mart is so far behind the big guys. The $1.7 billion Wal-Mart did in Web sales last year makes it the 13th biggest online store in the U.S. Chart via JP Morgan’s Imran Khan:

And even if Wal-Mart’s new partners do boost sales significantly, the ecommerce market is likely to grow even faster. Bernstein analyst Jeffrey Lindsay expects U.S. online retail to grow by $13 billion in 2010 and another $19 billion in 2011. So don’t expect to see Wal-Mart’s Web foes wiping their brows just yet.

[Image credit: PinkMoose]

Answer: probably not all that bad. As Yankee Group analyst Joshua Martin notes, Chrome is hardly a Windows killer. “The Chrome OS isn’t the final bullet in the war between Google and Microsoft, rather it’s merely a shot across the bow,” Martin wrote in a note to clients. “Google’s targeting of netbooks will reduce Window’s market share of this high growth category, but the effect will only be slightly greater than the introduction of Linux-based netbooks.”

In other words, Chrome will prove more a nagging irritant to Microsoft (MSFT) than anything else–at least initially. And while it will presumably increase the use of Google’s (GOOG) Web services and applications, it’s not going to be unseating Windows, the darling of enterprise, anytime soon.

Writes Bernstein analyst Jeffrey Lindsay: “Although the Chrome OS will initially be released for netbooks, Google indicated that it could eventually be used to power full-size desktop systems. However, it is unclear how much traction Google could gain in this market, as the Chrome OS would presumably not be compatible with Windows based programs. Instead, Google would need to rely on people to more fully adopt web-based services (a long-dated proposition), or for software developers to port their applications over to Chrome OS.”

And if that’s the case, it’s going to be a long time before we see Windows application compatibility, which is key to this particular battle. Until then, Chrome OS will perform about as well as Linux has in the netbook market, which is to say, not well at all. “It will take quite a long time for Google to become a competitor to Microsoft,” said Gartner analyst Michael Silver. “In the enterprise, for example, over 70% of the applications used require Windows. And even at home, things like personal finance still require Windows. So, while I think this is a longer-term threat to Microsoft, it’s definitely not in the short term.”

Answer: probably not all that bad. As Yankee Group analyst Joshua Martin notes, Chrome is hardly a Windows killer. “The Chrome OS isn’t the final bullet in the war between Google and Microsoft, rather it’s merely a shot across the bow,” Martin wrote in a note to clients. “Google’s targeting of netbooks will reduce Window’s market share of this high growth category, but the effect will only be slightly greater than the introduction of Linux-based netbooks.”

In other words, Chrome will prove more a nagging irritant to Microsoft (MSFT) than anything else–at least initially. And while it will presumably increase the use of Google’s (GOOG) Web services and applications, it’s not going to be unseating Windows, the darling of enterprise, anytime soon.

Writes Bernstein analyst Jeffrey Lindsay: “Although the Chrome OS will initially be released for netbooks, Google indicated that it could eventually be used to power full-size desktop systems. However, it is unclear how much traction Google could gain in this market, as the Chrome OS would presumably not be compatible with Windows based programs. Instead, Google would need to rely on people to more fully adopt web-based services (a long-dated proposition), or for software developers to port their applications over to Chrome OS.”

And if that’s the case, it’s going to be a long time before we see Windows application compatibility, which is key to this particular battle. Until then, Chrome OS will perform about as well as Linux has in the netbook market, which is to say, not well at all. “It will take quite a long time for Google to become a competitor to Microsoft,” said Gartner analyst Michael Silver. “In the enterprise, for example, over 70% of the applications used require Windows. And even at home, things like personal finance still require Windows. So, while I think this is a longer-term threat to Microsoft, it’s definitely not in the short term.”

But that’s likely to change, predicts Bernstein analyst Jeffrey Lindsay. He says that while Google (GOOG) is on track to shell out $1.4 billion on capital expenditures this year, that number will shoot up up more than 40 percent next year, to $2 billion.

That’s because even though ad dollars may have slowed down, Google’s search queries haven’t–they were up 50% in April. And while casual observers don’t think about it, running a search company is a capital-intensive business: More queries equal more servers. Lindsay estimates that a new data center built in the U.S. costs Google $600 million; one built offshore runs around $300 million.

Interesting side note: Lindsay predicts that Google’s endless growth will eventually force it to rethink the way it runs YouTube and may end with the company figuring out a way to charge users who upload video, or at least, to limit their uploads. YouTube processes more than 13 hours of a video per minute, and a number that’s only going to increase, particularly as mobile video uploads pick up courtesy of devices like Apple’s (AAPL) new iPhone 3GS.

Strategically, we expect that the rising costs of hosting limitless video may encourage the company to consider positive changes with YouTube. Ultimately, we believe the company will need to find a way to charge for uploads or for viewing clips (or both), or begin to confront the reality of retaining a business where costs continue to outpace revenue growth.

But for now, YouTube is still a free-for-all, which is why we can all enjoy this clip of Michael Llodra bowling over a ballgirl at Wimbledon yesterday (she’s OK, but he ended up bailing on his match).

One of the chief selling points of Amazon’s (AMZN) Kindle is that once you’ve paid $359 or more for the e-book reader, you can start recouping your investment by buying digital books for much less than it costs to buy their physical counterparts. And the vast majority of Kindle downloads are indeed priced at $9.99 or less (and a third of them are freebies):

Digital books should be higher-margin products than physical ones since the cost to produce and distribute them is so much lower. And they will generate higher margins eventually. But right now, Amazon is subsidizing the cost of those $9.99 books, which means they’re just barely profitable.

Bernstein analysts Claudio Aspesi and Jeffrey Lindsay estimate that Jeff Bezos and company record an operating profit of 61 cents on each $9.99 e-book they sell. But a $24.95 hardcover generates $4.25 in operating profit. That’s a 7 to 1 ratio, and that can’t continue, indefinitely.

The good news: Aspesi and Lindsay argue that Bezos doesn’t have to raise his prices by that much to make his e-books much more profitable. Bumping up best-seller prices from $9.99 to $12.50 would boost his profits from 6 to 20 percent per book, they estimate. The flip side: Costs for the devices themselves will certainly go down.

When I talk to people about Web video, I usually end up chatting with people who are in one of two camps. Either they’re tech-centric early adopters, who believe that networks are dinosaurs and that the masses are ready to ditch their cable TV subscriptions for Hulu and the like; or they’re old media realpolitik-sters, who think most people want nothing more than to come home, plop down on the couch and hit the remote. And that anything else is just marginal hype.

The truth has to be somewhere in between, right?

Yep, says Bernstein Research analyst Jeffrey Lindsay, who has rolled out a new study on the demographics of online video watchers, based on a survey his shop conducted in March. Lindsay concludes his study by announcing that Hulu, the joint venture between News Corp. (NWS) entertainment unit Fox, GE (GE) unit NBC Universal and soon, Disney (DIS) unit ABC, is more of a threat to Big Media (or at least to the cable guys) than Google (GOOG)) online video monster YouTube.

Not sure about that, but I do appreciate some of the data that Lindsay has unearthed, some of which reaffirms my own biases, and some of which challenges them.

For instance: More than half of the country is already watching television or movies via a Web connection, and nearly half of those people are oldsters over 40 (click to enlarge).

But very few online video watchers are pirating the stuff they watch. I would have thought, based on the ascent of sites like Megavideo, that piracy was much more prevalent:

Here’s the one I found most interesting–a third of online video watchers say they could see themselves ditching TV altogether in favor of the Web. That’s a third of all Web video watchers, mind you, so that’s maybe 15 percent of the population. But if that number is even close to accurate, that is indeed a real problem for the cable industry and the rest of the media ecosystem that depends on it.

The counter to that last point: Given the choice, people still prefer to watch TV on TV, and they view Web video as a separate option that’s less good.

That’s because the site is very expensive to run–YouTube served up 5.5 billion videos to U.S. viewers alone in March–and a very hard sell to advertisers, who are scared off by its more-or-less-anything-goes collection of clips. The site doesn’t even bother to try sell ads on more then a small percentage of its videos.

But the latter part of that equation may be changing, argues Bernstein Research’s Jeffrey Lindsay. He thinks YouTube has the ability to sell ads against nine percent of its inventory. That alone represents progress–last year, that number was around three to four percent.

But Lindsay thinks that Google (GOOG) is getting better at putting more advertiser-friendly stuff up on the site, via projects like the TV and movie hub it rolled out last month.

That site doesn’t have anything like the breadth that Hulu boasts, but it’s a big improvement over what used to be there. Lindsay figures that it will get better and that next year YouTube will be able to sell ads on 15 percent of its inventory. His note:

We also note the large increase in advertising on YouTube, which we estimate currently has approximately 9% ad coverage and which we believe could rise to 15% within the next 12 months as more professionally-produced content and movies are added to the Web property. We understand that Google is currently exploring new payment mechanisms–micro-payments and subscriptions to expand YouTube’s business model. Although YouTube revenues are likely to be small through the end of 2009 (we estimate $123 million), we think the increased ad coverage will place YouTube in a favorable position when CPMs eventually start to recover in 2010 and beyond. Our 2010 forecast for YouTube revenues of $222 million represents 81% growth over 2009.

Then again, YouTube still has a very long way to go. Look at the most popular clips on the site today and you’ll find a whole lot of video from this week’s Barcelona-Chelsea Champions League match, all of which seem to be copyright violations, which makes them toxic to advertisers.

Here are four examples from the same game. Note that all of them seem to have been up on the site for at least a day:

So that’s a big deal. But it has also been expected for some time now. So what should you be looking for?

As Barron’s Eric Savitz notes, Wall Street analysts have been furiously tweaking their estimates–generally downward–in advance of this afternoon’s report. Citigroup’s (C) ever-helpful Mark Mahaney provides the following “cheat sheet” that lays out the key metrics, along with a range of possible results (click to enlarge):

I’ll also be interested in what, if any, color Google (GOOG) offers about its nascent move into display advertising and if it can clarify exactly what is going on at YouTube–is the video site bleeding $500 million a year, as Credit Suisse has recently suggested, or is it “nearing break-even,” as Bernstein’s Jeffrey Lindsay argued in a note yesterday?

And given that Google is the first big Internet company to report this quarter–and, aside from Gannett (GCI), the first big media company to report–I’ll also be interested in whatever Eric Schmidt and company have to say about the advertising market in general. The Google earnings call is scheduled to start at 4:30 p.m. Eastern; you can find live coverage here.

That’s the possibility floated, albeit in an offhand way, via Bernstein Research’s Jeffrey Lindsay in a note published this morning: “We would likely expect further divestments of non-core businesses, possibly including StubHub.”

I understand why the auction site dropped StumbleUpon, a Web 2.0 publishing business with a novel and unproven revenue model. And it makes sense to stop carrying Skype, a telecom business that requires a lot of time, money and maintenance.

But Stubhub, which eBay bought for $307 million a little more than two years ago, seemed like a bona fide fit: The ticket resale business mirrors eBay’s (EBAY) core auction in pretty obvious ways. I’ve asked Lindsay to tease out his thinking for us, and will update if he does.

UPDATE: Here’s Lindsay, via email: “It seems that eBay is going right back to basics, and is dispensing with the ‘we are an auction company’ ethos that got them into so much trouble. We see StubHub as coming out of that era. We think the market in tickets is changing rapidly and there is a chance to sell StubHub at the very top. They might well take it and pursue a much more pure play retail/second hand portfolio and go back to geographic expansion of the marketplaces/PayPal core.”

Meanwhile, if eBay does decide to jettison StubHub, now would be a very interesting time to do so. TicketsNow, its primary competitor, is likely to go on the block in the near future: Parent company Ticketmaster (TKTM), which acquired the business for $265 million a year ago, has said it would dump the business in order to mollify antitrust critics (and Bruce Springsteen fans) who want to stop the company’s proposed merger with Live Nation (LYV).

Anyone want to corner the market on the ticket-scalping industry?

[Image credit: Hyrck]

PlentyofFish has long been a free site, which has made it hugely popular. It claims on its Web site that members will go on 18 million dates with each other this year.

In a February report, Sanford Bernstein analyst Jeffrey Lindsay called it “the most successful of a new generation of ‘free’ or advertising-supported dating sites,” and one whose growth could pose a “Craigslist-like disintermediation” threat to established players like Yahoo Personals (YHOO) and IAC’s (IACI) Match.com.

By wading into the paid arena, it may lessen that disintermediation risk, but compete on more even terms with those sites.

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Highlighting the problem of counterfeit merchandise sold on the site, Bloomberg reports that the company provided a tip to German police that triggered the seizure of 20 tons of knock-off designer clothing last month. While it is certainly good to see eBay taking an aggressive posture on fake goods, the company clearly has an issue to resolve here. As Bernstein Research analyst Jeffrey Lindsay notes in the story, eBay is “only as good as its worst seller in the minds of its customers.”

The story also notes that eBay has been sued by a number of luxury brands for not doing enough to insure that sellers don’t peddle fakes.

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Can’t wait for the debut of Kindle 2.0, which should arrive around 10 a.m. this morning in New York?

Here’s a splash of cold water, courtesy of Jeffrey Lindsay: The Bernstein Research analyst says Amazon’s much-hyped e-book reader is merely a “niche product”–and that the e-commerce giant wants to keep it that way.

Lindsay’s argument in a nutshell: Electronic delivery of content may be the future of Amazon’s (AMZN) business, but it’s going to make most of its money selling physical goods for a long time to come. So Jeff Bezos and company won’t make the moves that, say, Steve Jobs and Apple (AAPL) might make if those guys were pushing e-books.

Lindsay: “Unlike Apple with the iPod, which cannibalized somebody else’s sales–namely the music industry–Amazon with Kindle is in part cannibalizing sales of its bestselling product, and this must be factored into the economics.”

Translation: Don’t expect to see super-cheap (say, $99) Kindles anytime soon.

Lindsay’s numbers aren’t radically different than those of Mark Mahaney, the Citi (C) analyst who has been notably bullish about the Kindle and its impact on Amazon’s business.

Both men estimate that Amazon sold about 500,000 devices last year. And while Mahaney thinks Amazon’s hardware and software sales will be a $1.2 billion business by the end of next year, Lindsay has a more conservative $900 million estimate.

Even by 2012, when Lindsay thinks Amazon will be selling two million Kindles a year, this won’t mean that much: Amazon’s revenues could actually decline by 0.6 percent because of slower physical book sales, while the company’s earnings would increase by perhaps 2.9 percent, the analyst predicts.

All worthy thoughts to contemplate–a little later on today. But in the very near term, most Kindle-watchers will be focused on more prosaic concerns. Like are those “leaked” Kindle 2.0 product shots real? We should have answers in a few hours, when Amazon holds its press conference at the Morgan Library.

Check back at All Things Digital at 10 a.m., where I’ll be liveblogging the event.

“Concerns about the Chinese economy and a spate of controversies affecting the Internet in China, including a recent crackdown on pornography, have rattled investor confidence in both stocks,” he writes. But Lindsay says those fears are “unwarranted,” and asserts that “even with slower economic growth, there is more than enough domestic growth to fuel both players for at least the next 5 years.”

Lindsay notes that China has surpassed the U.S. to become the world’s largest Internet market. But he says that in terms of per capita usage, the Net in China still looks like the U.S. in the late 1990s.

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For Amazon, he has three major concerns:

Reduced discretionary spending as unemployment and home foreclosures further erode U.S. consumer confidence. He notes that “the vast majority of goods sold by Amazon are discretionary purchases.” He says consumers have “pulled out all of the stops for the holiday season”–have they?–he expects “much more cautious and restrained spending as redundancies and home foreclosures continue as expected through 2009.”

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Late Tuesday, Bernstein Research analyst Jeffrey Lindsay provided a pre-announcement update on the prospects for the quarter, and he is not optimistic. Lindsay is looking for revenue of $1.39 billion and pro forma profits of seven cents a share; that is a bit above the consensus at the top line, but two cents below the Street at the bottom line.

He notes that the Interactive Advertising Bureau last week released data that showed paid search grew 24 percent in Q2, compared to 17 percent for display ads, while classifieds and sponsorships fell 6 percent and overall ad spending rose 13 percent.

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At least, Bernstein Research analyst Jeffrey Lindsay thinks so. This morning, Lindsay trimmed his EPS estimates for Google and reduced his target price on the stock to $660 from $700. But he nonetheless contends that “even with the most pessimistic macro outlook we can engineer–a blighted global economy with perversely high oil prices–we conclude that Google is worth approximately $535/share and at current prices is over-sold.”

To reflect a softening economy, he cut his 2008 EPS estimate to $19.03 from $19.46; for 2009 he goes to $22.68, from $24.25.

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BoomTown hates to miss any possible opportunity to reference a Charlton Heston movie and, thus, was struck by a report by a Wall Street analyst that Google (GOOG) and Amazon (AMZN) will be the sole survivors of the most recent digital age.

Sanford C. Bernstein analyst Jeffrey Lindsay said as much in a 310-page report, “U.S. Internet: The End of the Beginning” he penned, noting that only the search giant and the e-commerce pioneer had legs.

Yahoo (YHOO)? Acquired by Microsoft (MSFT).

IAC (IACI)? Split up into five too-teeny, ineffective parts.

And eBay (EBAY)? Acquisition bait for a “Microsoft-like suitor,” if it cannot goose the growth in its key auction business.

While BoomTown loves a good predictions piece as much the next blogger, the report’s conclusions feel like it has a bit of a backward-looking tone.

That’s because who knows what tomorrow brings, in a world few geeks survive.

Oops, now I am channeling the love song “Up Where We Belong” from “An Officer and a Gentleman,” and that can’t be good.

Suffice it to say, there is a new company you’ve never heard of–that might not even exist yet–and that’s the one everyone really needs to be scared of.

But not scarier than this video in anime and with guns inexplicably blazing, using the Joe Cocker/Jennifer Warnes song–though BoomTown definitely likes it–here: