Google's Q4: Europe, Motorola margins in focus

Google's fourth quarter is expected to be strong, but worries about Europe as well as the company's margins once it closes the Motorola Mobility purchase persist.

Wall Street is expecting Google to report fourth quarter of $10.48 a share on revenue of $8.4 billion, including traffic acquisition costs.

Among the key points in Google's quarter:

• Europe: Google gets about 35 percent to 40 percent of its total revenue from Europe and the United Kingdom, according to Piper Jaffray analyst Gene Munster. That fact means that Google has to be watching Europe's economic troubles closely. "Europe represents the biggest wild card in Google's fourth quarter report," said Munster, who noted that the rest of the world and U.S. may pick up the slack.



Google CEO Larry Page.

• Motorola Mobility: The deal is expected to close in March and if it does Google's profit margins are likely to tank. Operating margins will fall from 46 percent in 2012 to 30 percent or so once Motorola Mobility is digested. Munster expects executives to be mum on Motorola, but there's a growing consensus that believes Google will hang on to patents and ditch the rest. Also see: Google's Motorola Mobility acquisition: Does it still add up?
• Display advertising: Evercore analyst Ken Sena expects Google to spend a good chunk of time discussing display advertising. Despite all the focus on search, Google is dominant in display ads too. "In display, Google is amassing a comprehensive platform that could make it the dominant way that display is bought and sold -- outside of Facebook---in the coming years," said Sena.
• YouTube: Analysts noted that YouTube is growing at a rapid clip and pushing display ad growth near the 100 percent mark. Google, however, is still tweaking the model. Benchmark analyst Clayton Moran said that YouTube growth could slow slightly amid stiff competition.
• New initiatives. Expect another heavy dose of Google+ talk from CEO Larry Page and the crew. What remains to be seen is whether Google will address the flap that has revolved around the company's search to its social network. Analysts are bound to ask about regulatory concerns.

The year in Google shares:

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