Big Internet earnings week points up uncertainties

By Eric Auchard

SAN FRANCISCO (Reuters) - Big Internet stocks have fallen 25 percent to 40 percent in the last quarter and haven't looked cheaper in years. But despite expected strong year-end results, many investors are likely to shy away in the short run.

Investors are set to focus on company outlooks and how a slowing U.S. economy will lead to advertising cutbacks and more hesitation among online shoppers over the course of 2008. Yahoo Inc posts results on Tuesday, followed by Amazon.com Inc on Wednesday and Google Inc a day later.

"At the moment, investors are paying an awful lot more attention to outlooks than they are to past performance," said Jeffrey Lindsay, an analyst with broker Sanford C. Bernstein. "Any sign of lowering guidance is instantly seized upon."

Google faces uncertainty over how its online ad business performs in a tighter economy and questions over shifting its computer-based business on to mobile phones, if it wins rights to U.S. airwaves and becomes a wireless operator.

Because Google does not comment directly on its outlook, investors must read the body language of Chief Executive Eric Schmidt or decipher the meaning of any passing comment Google offers about key advertisers in financial services or autos.

The Internet market leader is expected by Wall Street to post fourth-quarter revenue growth of better than 50 percent amid ongoing market share gains in Google's search business. Analysts look for revenue at Yahoo to grow just 15 percent.

Highlighting the contrast with Google, Yahoo is set to announce job cuts alongside lower earnings this week. Sources familiar with the plan say fewer than 1,000 employees could lose jobs -- about half what was rumored on some blog sites.

Yahoo's fourth-quarter profit is seen down 31 percent to 11 cents per diluted share, while Google is slated to post a 40 percent rise, excluding stock options and one-time items.