Google churns out slightly higher earnings in final quarter of 2012
Source: Agencies |
January 24, 2013, Thursday
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Print Edition
Print Edition
GOOGLE eked out slightly higher earnings in the fourth quarter, despite a financial drag caused by the Internet search leader's expansion into device manufacturing and a decline in digital ad prices as more people gaze into the smaller screens of smartphones.
More advertising poured into Google during the holiday shopping season, fueling a moneymaking machine that has steadily churned out higher profits since the company went public in 2004. Google's fourth-quarter ad revenue totaled US$12.1 billion, an increase of 19 percent from the previous year.
Some of that money, though, has been shifting away from personal computers as advertisers try to connect with an expanding audience that relies on smartphones and tablet computers to reach Google's search engine, e-mail and other online services. By some estimates, about one-fourth of the clicks on Google's search ads are now coming from mobile devices.
So far, advertisers have been unwilling to pay as much money to market their products on mobile devices, largely because the smaller screens leave less room for commercial links and other marketing messages. The trend is one of the reasons that the average price for the ads that Google shows next to its search results has declined from the previous year in five consecutive quarters, including the final three months of last year.
In a positive sign, though, Google's average ad prices in the most recent quarter dropped by just 6 percent from the same period in 2011. That's the smallest decline during the pricing downturn, raising hopes that Google may be starting to solve the pricing problems posed by the growing usage of mobile devices.
In a conference call on Tuesday, Google CEO Larry Page predicted ad prices will gradually rise as the devices become even more sophisticated to unleash new ways to reach potential customers at the times they are most likely to buy something.
"In today's multi-screen world, the opportunities are endless," Page said.
Google earned nearly US$2.9 billion, or US$8.62 per share, in the fourth quarter. That compared with net income of US$2.7 billion, or US$8.22 per share, a year earlier.
If not for the costs of employee stock compensation and certain other accounting items, Google said it would have earned US$10.65 per share. On that basis, Google exceeded the average earnings estimate of US$10.54 among analysts surveyed by FactSet.
More advertising poured into Google during the holiday shopping season, fueling a moneymaking machine that has steadily churned out higher profits since the company went public in 2004. Google's fourth-quarter ad revenue totaled US$12.1 billion, an increase of 19 percent from the previous year.
Some of that money, though, has been shifting away from personal computers as advertisers try to connect with an expanding audience that relies on smartphones and tablet computers to reach Google's search engine, e-mail and other online services. By some estimates, about one-fourth of the clicks on Google's search ads are now coming from mobile devices.
So far, advertisers have been unwilling to pay as much money to market their products on mobile devices, largely because the smaller screens leave less room for commercial links and other marketing messages. The trend is one of the reasons that the average price for the ads that Google shows next to its search results has declined from the previous year in five consecutive quarters, including the final three months of last year.
In a positive sign, though, Google's average ad prices in the most recent quarter dropped by just 6 percent from the same period in 2011. That's the smallest decline during the pricing downturn, raising hopes that Google may be starting to solve the pricing problems posed by the growing usage of mobile devices.
In a conference call on Tuesday, Google CEO Larry Page predicted ad prices will gradually rise as the devices become even more sophisticated to unleash new ways to reach potential customers at the times they are most likely to buy something.
"In today's multi-screen world, the opportunities are endless," Page said.
Google earned nearly US$2.9 billion, or US$8.62 per share, in the fourth quarter. That compared with net income of US$2.7 billion, or US$8.22 per share, a year earlier.
If not for the costs of employee stock compensation and certain other accounting items, Google said it would have earned US$10.65 per share. On that basis, Google exceeded the average earnings estimate of US$10.54 among analysts surveyed by FactSet.
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