Google Profits Beat Expectations

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On Tuesday, Google announced its fourth quarter financial results, and the news was mostly good. Revenue climbed 36 percent year over year, and company earnings beat Wall Street expectations.

Computerworld’s Zach Miners reported, “Google’s fourth-quarter revenue was up 36 percent from the previous year, thanks to continued growth in its advertising business. Revenue for the quarter, ended Dec. 31, was US$14.42 billion, up from $10.6 billion a year earlier, Google announced Tuesday. The figure excludes the commissions and fees that Google pays to other sites that run its ads. Taking those into account, revenue for the last quarter was $11.34 billion.”

The Wall Street Journal’s Matthew Lynley noted, “Google delivered $10.65 a share in net income — better than analysts’ estimates of $10.47 a share. Revenue rose 36% to $14.4 billion, but excluding traffic acquisition costs, revenue was about $11.3 billion — that’s below the $12.3 billion in ex-TAC revenue Wall Street was predicting.”

Lynley added, “The average cost that advertisers pay every time users clicked on ads is stabilizing. That number has been falling dramatically in recent quarters because of the increase in mobile ads, but in the fourth quarter cost-per-click fell only 6% on-year and even rose 2% from the third quarter.”

Forbes quoted Google CEO Larry Page, who said, “We ended 2012 with a strong quarter. Revenues were up 36% year-on-year, and 8% quarter-on-quarter. And we hit $50 billion in revenues for the first time last year – not a bad achievement in just a decade and a half. In today’s multi-screen world we face tremendous opportunities as a technology company focused on user benefit. It’s an incredibly exciting time to be at Google.”

However, Claire Cain Miller with The New York Times cautioned, “But a closer look at the results shows that while Google continues to be a moneymaking machine, its most lucrative business, search on desktop computers, is slowing, while Google has not yet figured out how to make equivalent profits on mobile devices. ‘You would expect Google to be a key player benefiting from mobile, but that hasn’t played out in the last year,’ said Jordan Rohan, a Stifel Nicolaus analyst.”