Google faced rougher landscape in second quarter

By Alexei Oreskovic

SAN FRANCISCO (Reuters) - Wall Street expects Google Inc to report tepid revenue growth for the second quarter on Thursday amid a tough advertising market and a sharpened attack on its business by rival Microsoft Inc.

Analysts will be looking for updates on both fronts as they gauge the Internet giant's progress toward recapturing the double-digit sales growth it once enjoyed.

While analysts believe Google's search-based advertising model remains the best in the business, some say it has never been tested to this degree.

"Google can't stimulate demand," said Oppenheimer analyst Jason Helfstein. "All they can do is try to monetize the demand that's out there."

Helfstein expressed concern that Google could miss certain Wall Street targets, such as U.S.-based revenue, but he also said the second quarter could represent the company's low point in this economic downturn.

Analysts on average expect Google to report revenue of $5.49 billion for the quarter, up about 2.3 percent from nearly $5.37 billion a year earlier, according to Reuters Estimates.

The analysts' average forecast calls for earnings per share of $5.08, excluding certain items, compared with $4.63 a year earlier.

Shares of Google are up roughly 9 percent in the past three months, outperforming gains of 2.8 percent for the Dow Jones Industrial Average and 7.8 percent for the Nasdaq Composite.