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Watching Google's First-Quarter Earnings: A Search for ... Something

Last quarter, Google admitted Glass was a dud. This time, investors are praying for more signs of financial prudence and something (anything) on its core business.

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Reading Google’s earnings reports is typically an exercise in futility. The company says very little about its core business, and even less about its big bets on the future of technology.

When Google’s revenues were flirting with 25 percent growth, investors were okay with the silence. But now that those rates have slimmed — courtesy, in part, of threats from Facebook and a litany of e-commerce and local apps — their patience is wearing thin.

Google reports its first-quarter numbers tomorrow. Consensus estimates are for net revenue of $14.12 billion, a 16 percent uptick year over year. Currency winds could drag down the numbers, reminiscent of the “noise” from last quarter.

But the big question for tomorrow is if Google will articulate where it is going and how it plans to get there. Odds on getting an answer are low.

But there are three critical areas that Google’s executives will at least be prepared to address.

Reeling in the moonshots

One of the tidbits to come out of the last earnings call was the rare admission that one of Google’s pet projects — specifically Glass — had flopped. CFO Patrick Pichette named it among the initiatives Google has asked “to take a pause and take the time to reset their strategy.” Glass was subsequently shifted inside Nest, Google’s connected home division. More projects could follow, Pichette added. “We make the decision to cancel them, and you’ve seen us do this time and time again,” he said on the call. Earlier today, Google unveiled its latest endeavor, a new wireless service called Project Fi.

Some investors want to see cogent decisions on these projects, or at least some clarity about why they are canceled or even begun. Google keeps plowing money into them. Last quarter, its capital expenditure reached $3.55 billion, roughly a quarter of its net revenue. Two years ago, that figure stood under 9 percent of net revenue at $1.02 billion.

But Pichette’s comments signaled to investors that the Internet giant may be growing more prudent with its capital. And many are hopeful that his replacement, Ruth Porat, the Morgan Stanley CFO Google tapped last month, will accelerate the trend. She does not begin until May 26, however, and will not be on tomorrow’s call.

Some light on search, YouTube, Play

Despite the chinks in Google’s armor, its search and display ad business keeps printing money. Investors largely applauded Google’s moves to clean up mobile search, an attempt to wrangle back mobile display dollars that have fled to Facebook. They are waiting to applaud units like YouTube and Google Play, which are poised to reap ad money gravitating from TV and desktop. So far, Google has revealed very little of its strategy to turn these into viable contenders.

That probably won’t change tomorrow. In the absence of those numbers, though, analysts are hoping Google will shed light on the businesses that are in the black. “They should at least show us their success stories,” said Cantor Fitzgerald’s Youssef Squali.

Brussels trouble

Wall Street has, by and large, shrugged off last week’s European Union charges regarding Google’s shopping service and its probe into Android. A fine, which could theoretically exceed $6 billion, does not overly concern analysts — Google has enough cash on hand. Their worry is that the case will force Google to amend its search business, further accelerating the threat from rivals. Expect Google to field questions about Brussels tomorrow. However, don’t expect responses to vary much from the position the company laid out in advance of the charges.

This article originally appeared on Recode.net.