Business

Google’s fourth-quarter results shine after ad rate decline slows

Shares of Google were up roughly 4.5 per cent at RM2,235 in after-hours trading yesterday. – Reuters picShares of Google were up roughly 4.5 per cent at RM2,235 in after-hours trading yesterday. – Reuters pic

SAN FRANCISCO, Jan 23 – Revenue from Google Inc’s core Internet business outpaced many analysts’ expectations during the crucial holiday quarter and advertising rates fell less than in previous periods, pushing its shares up more than 4 per cent.

The world’s largest Internet search company introduced new product listings during the fourth quarter - typically its strongest - and also benefited from business growth in international markets, analysts said.

Excluding traffic-acquisition costs, the business generated net revenue of US$9.83 billion (RM30 billion), up from US$8.13 billion a year earlier, Google reported yesterday. That surpassed a US$9.6 billion average forecast from six analysts polled by Reuters.

“Business looked really strong, especially from a profitability perspective. They really grew their margins in the core business,” said Sameet Sinha, an analyst with B. Riley Caris. “Most of that strength seems to be coming from international markets which grew revenues quite substantially: up 23 per cent year over year, versus the 15 per cent growth in the third quarter.”

Average cost-per-click, a critical metric that denotes the price advertisers pay Google, declined 6 per cent from a year ago, the fifth consecutive quarter of decline.

Google executives told analysts on a conference call that the company had focused on improving the metric - shoring up margins - while lowering the overall growth rate of paid clicks in the holiday quarter.

“Click prices are still declining, but it’s better than expected,” said BGC Partners analyst Colin Gillis.

MOTOROLA MOBILITY “STILL LOSING MONEY”

Consolidated net income in the fourth quarter was US$2.89 billion or US$8.62 per share, compared with US$2.71 billion, or US$8.22 per share, in the year-ago period when Google had not yet acquired Motorola.

Excluding certain items, Google said it earned US$10.65 per share in the fourth quarter.

“The core business is a great business and the fourth-quarter is always a time for Google to shine. However, Motorola is still losing money and click rates still declined. They only declined 6 per cent, but go back four or five quarters and click prices were improving. So mobile is still pressuring click prices,” Gillis said.

The company posted consolidated revenue - which includes its Motorola Mobility mobile phone business but not the television set-top box business it recently agreed to sell - of US$14.42 billion yesterday.

Motorola Mobility had an operating loss of US$353 million during the quarter.

Shares of Google were up roughly 4.5 per cent at US$734.46 in after-hours trading yesterday. – Reuters

Comments