CHICAGO, April 21, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Google (Nasdaq:GOOGL-Free Report), Yahoo (Nasdaq:YHOO-Free Report), Microsoft (Nasdaq:MSFT-Free Report), Facebook (Nasdaq:FB-Free Report) and iRobot Corporation (Nasdaq:IRBT-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday's Analyst Blog:

What's Dragging Down Google's Results?

Google (Nasdaq:GOOGL-Free Report) missed the Zacks Consensus Estimate by 5 cents, or less than 1% on revenue that also missed by less than 1%. Earnings did, however, exceed year-ago levels by 6.0% on revenue that increased 10.4%. Despite the growth, investors punished the shares, sending Google Class A shares (GOOGL) down 3.3% and Google Class C shares (GOOG) down 3.2%.

Loss of revenue from Motorola, which was around 7% of revenue in both the previous and year-ago quarters impacted results in the last quarter. Google standalone revenue was down 1.8% sequentially but jumped 19.1% year over year.

The other sore point was the cost per click (CPC), which was flat sequentially but down 9% year on year. This did, however, generate paid click growth of -1% and 26% from the two periods, respectively.

Compare this with Yahoo (Nasdaq:YHOO-Free Report) search, where an 8% year-on-year increase in prices allowed for a mere 6% increase in paid clicks. So Google appears to be picking up a lot of lower-priced clicks that Yahoo is leaving on the table (note that Google saw very strong double-digit growth in non-U.S, non-U.K. revenue).

The numbers in detail-

Revenue

Revenue from Google-owned sites was flat sequentially, while that from partner sites was down 3.5% resulting in net advertising revenue decline of 1.4%. Both segments continued to grow (21.2% and 4.1%, respectively) from the year-ago quarter. Overall, Google-owned and partner sites brought in 68% and 22% of quarterly revenue, respectively.

Other revenue was down 5.8% sequentially and up 48.1% year over year to around 10% of revenue. Management attributed the increase to higher Play Store sales (apps, content and chromecast).

Total traffic acquisition cost, or TAC (the portion of revenue shared with Google's partners and amounts paid to distribution partners and others who direct traffic to the Google website) was down 2.4% sequentially and up 9.3% from the year-ago quarter (down 22 bps and 154 bps, respectively as a percentage of advertising revenue).

TAC related to AdSense arrangements has been declining in recent quarters, although distribution-related TAC has been increasing steadily. The steady increase in distribution-related TAC is significant, as it is indicative of growing competition for the Google platform.

Net advertising revenue, excluding TAC was down 1.2% sequentially and up 18.9% year over year.

Total revenue excluding total TAC came in at $12.2 billion, down 10.0% sequentially and up 10.7% year over year, slightly lower than our estimated $12.3 billion.

The U.S. generated around 43% of Google revenue, down 24.1% sequentially and up 14.1% from a year ago. The U.K., with a 10% revenue share was up 5.3% sequentially and 13.9% from last year. Other international markets accounted for the balance, representing sequential and year-over-year increases of 32.1% and 25.3%, respectively.

Margins

The gross margin of 61.3% expanded 537 bps sequentially and 342 bps from last year, positively impacted by the exclusion of Motorola. Pricing remained a negative as explained above. The increasing contribution from the mobile and emerging markets, as well as growing distribution costs were other factors.

Other costs, associated with data center operation, amortization of intangible assets, content acquisition, credit card processing and manufacturing and inventory-related costs increased slightly as a percentage of sales, which also negatively impacted the gross margin in the last quarter.

Operating expenses of $5.34 billion were down 2.8% sequentially and 17.5% from the Mar quarter of 2013. The operating margin was 26.7%, up 333 bps sequentially and 132 bps from last year. R&D and G&A increased sequentially as a percentage of sales while S&M fell.

Non-operating gains were $357 million, up from $125 million in the previous quarter and $134 million in the Mar 2013 quarter.

Google reported net income of $3.65 billion, or 23.7% of sales, compared to $3.39 billion, or 20.1% of sales in the Dec 2013 quarter and $3.39 billion, or 24.3% of sales in the year-ago quarter. GAAP earnings of $5.33 a share were up from $5.03 in the March quarter of 2013.

Balance Sheet

Google has a solid balance sheet, with cash and short-term investments of around $59.4 billion, up $662 million during the quarter. The company generated around $4.39 billion from operations in the last quarter and spent $2.35 billion on capex, netting a free cash flow of $2.04 billion. Google also spent $2.95 billion on acquisitions.

To Conclude

Google introduced "AdWords Enhanced Campaigns" last year, which enables advertisers to run each campaign across multiple platforms (desktop/mobile), helping them make use of location-based data, generate fresh leads, increase click through rates, improve conversion and increase ROI. The longer-term impact of the initiative should be positive because advertisers stand to gain.

The competitive landscape has changed a lot in the last few years and the company needs to do all it can to maintain its lead in the advertising market. Its traditional competitor Yahoo is pulling up its socks and Microsoft (Nasdaq:MSFT-Free Report) should also not be discounted. But the most dangerous of all is likely to be Facebook (Nasdaq:FB-Free Report), which has crept up on the online advertising market. We also anticipate margin pressures as a result of the increasing competition.

At the same time, we note that Google's initiatives in the ecommerce segment (both retail and payment platforms), its Google Fibre initiative, its Nexus, Chromebook and Chromecast platforms, the GDN and DoubleClick platforms, and the success of YouTube make it a power to reckon with.

Google generates revenue primarily from the sale of advertising space on its online properties. It has therefore focused on protecting and growing its position in the search market through continued innovation and quality improvements. This focus has ensured that it remains the dominant player in search across desktop and mobile platforms. Google's Android OS has gone a long way toward cementing its position in the mobile segment. Google has also made acquisitions over time that have augmented its in-house capabilities.

To top it all, Google has shown superb execution to date, as a result of which, its share price has appreciated 44.0% over the past year.

iRobot Shares Jump on DoD Contract Win

Robot maker iRobot Corporation (Nasdaq:IRBT-Free Report) witnessed a 3.9% rise in share price to settle at $38.29 on Apr 16. The hike came after the company secured a $59.2 million contract from the Department of Defense (DoD). iRobot is one of the 13 companies which have been awarded contracts worth $2.79 billion.

Per the contract, iRobot will supply Man Transportable Robotic System (MTRS) production systems. The MTRS is predominantly used by explosive ordnance disposal technicians for diffusing explosive devices. Along with this, the company will provide spare kits, depot repair services, depot level repair parts, parts supply, training, configuration management, approved accessories and engineering enhancements.

The contract requirements are expected to consummate by Apr 2015. The DoD conferred the contract for the Naval Surface Warfare Center, Indian Head Explosive Ordnance Disposal Technology Division.

iRobot is expected to benefit largely given the scope of the contract. The company will release its first-quarter 2014 results on Apr 22, after the market closes. In the last quarter, the company delivered in-line results with earnings per share coming in at 11 cents.

For first-quarter 2014, our proven model does not conclusively show that iRobot is likely to beat earnings. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. iRobot currently carries a Zacks Rank #3 (Hold) and has an Earnings ESP of 0.00% (Most Accurate estimate and the Zacks Consensus Estimate stand at 16 cents).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Get the full Report on GOOGL - FREE

Get the full Report on YHOO - FREE

Get the full Report on MSFT - FREE

Get the full Report on FB - FREE

Get the full Report on IRBT - FREE

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO

SOURCE Zacks Investment Research, Inc.