Google+ may be the first "big hit" with Larry Page as CEO  (Source:
Google's increased spending and reduced profit margins have investors cringing at the thought of what Google will report regarding its earnings tomorrow

Google has had quite an active quarter with the Federal Trade Commission investigating its search and advertising practices, and the release of Google+'s testing phase. While investing in new initiatives is required to stay competitive, Google's increased spending and reduced profit margins have investors cringing at the thought of what Google will report regarding its earnings tomorrow.

Competition in the digital world is thick with companies like Microsoft and Apple releasing new mobile/computing devices, and Facebook offering the latest social networking features. To keep its number one position in web search and to stay competitive in other markets like mobile and social networking, Google has spent large amounts of money to push such initiatives forward -- and its not even finished yet. After giving employees a 10 percent raise at the beginning of the year, Google plans to hire 6,000 additional employees this year to increase its talent pool and offer top-notch products/services.

But investors are taking note of this increased spending, and while these ventures may prove to be rewarding in the future, they have put quite a dent in Google's pocket for now.

"I'm kind of putting my head under my desk about the expense line," said Pat Adams, a portfolio manager at the Dunham Loss Averse Growth Fund, which owns Google shares. "It's kind of like the employment figures last week, how bad is it going to be?"

Last quarter, shares of Google dropped 8 percent after the search giant announced an increase in operating costs, which "ate" into margins.

"If people can see any sign that the margins have at least stopped declining, then the stock will be good," said Mike Binger, a fund manager at Thrivent Financial, which owns Google shares. "My hope is that they front-end loaded the spending and they can put up a decent earnings number."

Despite investor worries, there is one thing that may put their minds at ease: Google+.

Google+, which is Google's new social networking site that launched two weeks ago, has already attracted millions of users. According to's Paul Allen, the fresh-faced social network may have 20 million users by this weekend.

Since the release of Google+'s testing phase, Google's shares have increased approximately 9 percent. It closed Monday at $527.28. Jordan Rohan, Stifel Nicolaus analyst, noted to investors this week that Google+ may be the first "big hit" with Larry Page as CEO.

While Google+ could prove to be a winner, investors are still slightly concerned about government probe regarding Google's search and advertising practices. They're hoping to hear more tomorrow about whether Google will take care of the situation quickly or if it will get into a long-term battle. But even if it did end with "regulatory repercussions," they likely wouldn't be put in place for years.

StarMine's SmartEstimates predicts that Google will post adjusted earnings per share of $7.76, which is 10 cents lower than the average expected earnings per share of $7.86.

In other news, Google has introduced a Google Voice spam filter that not only reports spam, but completely redirects calls, texts and voicemails from numbers that have been marked as spam in the database. This completely eliminates the hassle of dealing with spam in any fashion. In addition, if a number you marked as spam isn't actually spam, it can be unblocked by choosing the "Not Spam" button in the spam folder.

This feature can be enabled by checking the box next to Global SPAM filtering under the Calls tab of Google Voice's settings.

"The whole principle [of censorship] is wrong. It's like demanding that grown men live on skim milk because the baby can't have steak." -- Robert Heinlein

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