Mediaboss Marketing

European officials are looking for Google to correct issues relating its search results. (Google)

Google-parent Alphabet (GOOGL) has already disclosed how a big European Union fine will lower second-quarterearnings when it reports late Monday, but analysts and investors remain in the dark on other EU fine-related issues that Chief Executive Sundar Pichai may clear up on its earnings call.

What's known is that Google's earnings will take a hit from the $2.74 billion fine, announced in late June, which will be reported as an operating expense. The EU says the internet giant skewed search results to benefit its own shopping search service vs. those of rivals.

Google has 90 days to change its comparison shopping services or face additional fines. Just what remedies the internet search giant plans to adopt is a wild card and analysts may seek some guidance from Pichai on the earnings call. Google's Product Listing Ads revenue could be impacted among other things.

"What is very unclear is what changes Google would have to make to its SERP (Search Engine Results Page) and what financial impact this could have on the company," Mark Mahaney, RBC Capital analyst, said in a note to clients. "Our working assumption is that Google's SERP has been optimized for user satisfaction (with monetization a secondary objective), so that any material SERP change could negatively impact the Google user experience and in that regard negatively impact its monetization potential."

The EU is also probing Google's Android operating system, its AdSense online ad service and Google Maps.

IBD's TAKE:Alphabet is close to a 1,008.71buy pointin aflat base. Aggressive investors could treat 994.09 as an alternative entry, which Alphabet has been nearing in recent sessions. Learn more at IBD Stock Checkup.

Pichai could be pressed on Google's outlook on further EU antitrust fines and regulatory measures down the road.

Google could also face civil actions for damages by EU-based companies. The good news is thatGoogle has some $92 billion in cash.

The consensus estimate looks for Alphabet to report gross revenue of $25.64 billion and net revenue of $20.9 billion, both up 19% from the year-ago quarter, with adjusted earnings growing 18% to $8.25 a share.

Shares of Alphabet were down marginally to 991.42 in afternoon trades Monday.

RELATED:

These 5 Top Stocks In IBD's No. 1 Group Are In Bases, Near Buy Zones

Biotechs On A Hot Streak, And Could Be 'Cooking With Gas'

12:08 PM ET Build your watch list and action plan with a look at stocks set to report.

12:08 PM ET Build your watch list and action plan with a look...

Read more from the original source:
Can Google Clear Up Europe Search Issues With Earnings Report? - Investor's Business Daily