INSTANT VIEW: Google, IBM post stronger-than-expected results

NEW YORK/LOS ANGELES (Reuters) - Google Inc. reported quarterly earnings that blew past Wall Street expectations, while posting its strongest sequential revenue growth in more than a year.

Quarterly results from IBM also beat expectations, but more modestly, and the company once again raised its forecast for full-year earnings.

COMMENTARY:

GOOGLE

CHARLES LIEBERMAN, CHIEF INVESTMENT OFFICER, ADVISORS

CAPITAL MANAGEMENT

"Google certainly crushed expectations. The earnings number was up almost 10 percent over the expectations. That's a big, big beat in this environment where people think earnings are going to do poorly."

COLIN GILLIS, SENIOR ANALYST, BRIGANTINE ADVISORS

"They did great on every single metric. We think this is sustainable. This is the golden period when you have strength in CPCs as well as paid clicks.

"The CPC metric was most exciting because it showed sequential growth, indicating that advertisers are paying more to reach consumers.

"Google has no competition. Yahoo is withering on the vine and Bing is too tiny now. They will have competition once Microsoft has captured Yahoo shares. It will then have captured approximately 30 percent of the market."

ROSS SANDLER, SENIOR INTERNET ANALYST, RBC CAPITAL MARKETS

"It's pretty solid all around. This is one of the cleaner quarters they've had in the past year.

"There is upside pretty much across the board in terms of revenue -- U.S. (ad sales) beat our estimates, international (ad sales) significantly beat our estimates... and EPS beat our estimates.

"We think the stock is going to trade higher. The numbers are clearly going up on the back of this. The only thing making investors cautious is that (Google Chief Executive Eric) Schmidt mentioned investing heavily on our future. We think this is pretty standard for Google -- all in all a strong quarter."

JASON HELFSTEIN, ANALYST, OPPENHEIMER & CO

"Clicks were better quarter to quarter and the decline in CPCs was also better. That's what drove the upside in revenues. Currency was worse than people thought, but excluding that, U.S. revenues were better than forecast.

"This is the most efficient way for advertisers to advertise and with the economy likely getting better, Google is likely among the first to see it."

SAMEET SINHA, SENIOR ANALYST, JMP SECURITIES

"The performance was really good both on revenue side and the expense side. Going forward, they have been (saying) that the worst of the recession is over and they will continue to invest in their business. So operating leverage will be muted.

"I think a rising tide will lift all boats. Definitely, we hear from advertisers that they are starting to invest in the fourth quarter. E-commerce is doing really well and that is encouraging advertisers to spend online."

LAXMI PORURI, ANALYST, PRIMARY GLOBAL RESEARCH

"Google did very well considering people are still cautious. I don't think it signals a turnaround, but in an uncertain market people stick with what works.

"Google has the best ROI in search and in an uncertain market people will go toward Google for advertising rather than something not proven.

"With advertising at its core, Google is benefiting from higher bid pricing on its search. In the next two to three quarters, we'll continue to see strong fundamentals.

"In the next 9 to 12 months, we might see an uptick in business for Yahoo/Microsoft, which may or may not impact Google."

IBM

BRIAN MARSHALL, ANALYST, BROADPOINT AMTECH

"It was a disappointment to expectations. They were roughly in line with the topline as well as the bottom line. People were expecting more upside on the bottomline. Historically, IBM has done a good job of delivering some upside to EPS through aggressive financial engineering and we just didn't see that this time around.

"The numbers are good on a relative basis -- disappointing to expectations, but IBM is obviously the world's largest enterprise infrastructure company out there, and is more like a tanker ship.

"We're seeing smaller, more speedboat-type guys like NetApp, Brocade, EMC actually start to grow and have a little bit more margin leverage in the model than IBM right now, but I expect IBM will start hitting stride sometime in calendar year 2010."

ANDY MIEDLER, ANALYST, EDWARD JONES

"The story is really how good the numbers are. Overall, these are very good results and IBM continues to execute flawlessly during the downturn.

"Shares are down because investors might have expected a higher increase in guidance but over the long term IBM remains very well positioned."

KIM CAUGHEY, SENIOR EQUITY RESEARCH ANALYST, FORT PITT CAPITAL

"I thought they had good results. I think people had expected a bigger upside. There's a slight beat on revenues. If you are someone who follows technology closely, the third quarter isn't a strong quarter, so that they beat at all, I am happy."

TED PARRISH, CO-PORTFOLIO MANAGER, HENSSLER EQUITY FUND

"The numbers look good. The topline and bottomline beat and you really can't expect much more. We've been complaining about tech companies that beat their estimates based on cost-cutting, but haven't really been able to beat their topline number. It's good to see one that's finally done that.

"The raised outlook is good news. It truly shows how diverse the company's business is. I think international is going to help them a whole lot. I think there's still a thirst for IBM's high quality business services internationally and I think that shows up in the numbers. I expected the company to hit its numbers and they did."

KEITH WIRTZ, PRESIDENT AND CHIEF INVESTMENT OFFICER, FIFTH THIRD ASSET MANAGEMENT

"We expected them to exceed expectations on both numbers. I also think you can interpret that the dynamics within the technology category are vastly improving. I think IT spending appears to be on the mend.

"Corporate spending is very much starting to show some rebound. Outside the US, I think you would see technology spending is stabilizing in Europe as well.

"As we look at the tech space, we think the general tone in this reporting cycle and for the next several quarters will be better than expected.

"They're doing a good job on structural expense management. As you saw in today's results, conditions in the industry are improving. They're seeing some topline growth finally. That's also translating into some margin expansion, better earnings per share than expected. Things are starting to show favorable trends and that's good news.

"Now that we've moved beyond depression pricing in the stock market, as we move into 2010 companies like IBM we think will be looking to fill in product categories and gaps through M&A. You're starting to see a lot of that take place already in 2009. Expect more of that next year - I wouldn't be surprised if IBM were a participant."

(Reporting by Yinka Adegoke, Ellis Mnyandu, and Caroline Valetkevitch in New York, Clare Baldwin in San Francisco, and Sue Zeidler and Gina Keating in Los Angeles; Compiled by Paul Thomasch)