Google turned in a solid financial report for the first quarter of 2013; both income and revenue showed gains, with earnings beating analyst expectations. However, mobile ad sales continue to be a weak spot with declines in cost-per-click rates.
CNNMoney's Julianne Pepitone reported, "Mobile continues to be a problem for Google, as the company struggles with how to make money off mobile ads and its Motorola smartphone unit. But earnings still beat Wall Street estimates. Overall, Google's first-quarter revenue jumped to nearly $14 billion, in line with Wall Street expectations. Net income rose to $3.9 billion, or $11.58 per share, handily beating estimates. Shares of Google (GOOG, Fortune 500) initially rose 3% in after-hours trading, but they lost some gains as investors digested the lackluster details on mobile."
ZDNet's Rachel King broke down the numbers, noting, "The Internet giant reported first quarter earnings of $3.35 billion, or $9.94 cents a share. Non-GAAP earnings were $11.58 a share on a consolidated revenue of $13.97 billion. Traffic acquisition costs (TAC) totaled $2.96 billion. That's up by approximately 31 percent annually. The adjusted revenue is then $11.01 billion. Wall Street expected Google to report Q1 earnings of $10.66 a share on revenue of $14.23 billion (including TAC).
BGR's Chris Ciaccia added, "CEO Larry Page said on the conference call that it is his job to make sure that Google and its engineers are working on big, bold bets to not only advance the company and its earnings, but society as well. 'A big part of my job is to get people to focus on things that are not just incremental,' Page said during the earnings call. Google is working on ambitious projects, such as Google Fiber, self-driving cars and other projects like Google Glass 'because no one else is crazy enough to try.'"
Claire Cain Miller with The New York Times observed, "Google’s core search business is under threat. But not to worry, its executives told shareholders on Thursday. It has its eye on a future with computers that talk to users, drive our cars and send information before we ask for it. Investors living in the here and now had mixed feelings about Google’s first-quarter financial results, which it reported Thursday, sending Google’s share price up 2 percent in after-hours trading. The company’s revenue slightly missed analysts’ expectations. Its earnings exceeded expectations, but only because of an anomalous tax credit from the government for research and development. Without it, Google would have narrowly missed earnings expectations, too. Still, Google’s results showed that whatever the threats, its core search business is still strong, even as desktop search and advertising slow because people are rapidly shifting their computer use to mobile devices, where Google struggles to make as much money."