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Google's earnings fall short of expectations despite 19 percent revenue increase

Advertising costs to blame
Fri Jul 19 2013, 10:33
Google logo (Robert Scoble Flickr)

INTERNET GIANT Google posted a 19 percent increase in second quarter revenue on Thursday, but its earnings still fell short of analyst expectations.

Google reported $14.1bn in revenue for the three month period ending in June, up 19 percent year on year, and profits of $3.2bn, an increase of 16 percent compared to the second quarter of 2012.

Despite this, Google's second quarter numbers fell short of analyst expectations, with most having forecast that Google revenues would increase 20 percent year on year. The company's stock price dipped five percent following its earnings call on Thursday, seeing it move further away from the $1,000 mark.

A number of factors contributed to Google's results falling short of expectations, in particular its cost per click (CPC) rate, essentially how much an advertiser pays Google every time a user clicks on an advert, which fell six percent year on year, while clicks were down 23 percent. This was likely due to the rise in mobile adverts, which are cheaper than those coming from a PC.

Google CEO Larry Page said during the earnings call, "Online advertising had developed in very device specific ways with separate campaigns for desktop and mobile. This made arduous work for advertisers and agencies, and meant mobile opportunities often got missed."

However, Google is looking at mobile as the area that can turn its fortunes around, and Page was keen to talk up the rumoured Motorola Moto X smartphone, the first real fruit of Google's Motorola partnership since the acqusition became final in May 2012.

"There is so much excitement around new devices today, and the potential for innovation is tremendous," Page said. "I know you're all eagerly anticipating what Motorola is launching soon. Having been a tester for a while, I'm really excited."

In the second quarter, Google's Motorola mobile revenue was $998m, up from $843m in the prior year period. µ

 

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