Blog Post

Google beats market expectations but core questions remain

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Google (s goog) announced second quarter earnings that showed the company is still enjoying strong growth. The company’s earnings beat analyst expectations but its crucial ‘cost-per-click’ metric for ads continues to decline, likely increasing the pressure on Google to find a way to diversify from its long time reliance on search advertising.

The company announced Thursday that its non GAAP earnings per share was $10.12. Analyst consensus was $10.04. Revenue excluding traffic-acquisition costs rose 21 percent from a year ago to $8.36 billion but that number fell slightly short of the $8.41 billion that was the consensus estimate from Thomson Reuters. On a GAAP basis, which includes the revenue Google earnings before sharing a portion with partners, revenue was $12.2 billion, up 35 percent from last year.

The company’s release reflected that it is selling more ads in more places to fuel its growth. A trouble spot remains, however, in that the amount of money it gets for each ad continues to decline. The “cost per click” declined by 16 percent from the same quarter a year ago and by 1 percent from the previous quarter.

The latest earnings are also significant in that they are the first to include figures from Motorola Mobility which officially became a part of Google in May. The phone maker contributed $1.25 billion or about 10 percent of Google’s consolidated revenue but Motorola’s operating income reflected a net loss.

More to come.

One Response to “Google beats market expectations but core questions remain”

  1. I’m helping them…. I bought two Nexus 7 and have already spent over a $100 in Play Store. Most likely that’s where they will make up money lost in Ads. Though I still find it hard to believe they’re declining revenue aren’t an attempt to pay less taxes. So I’m wondering if they report is only considering American Market?

    Because if Google is like Apple, what they report earned in America isn’t exactly figured to make them look like great citizens. Apple holds their CASH in in offshore banking and their European Headquarters is in Ireland where they get the greatest tax breaks.

    So if Google is doing the same thing, then naturally they have two sets of paper work. One for the government and one set for investors. That’s been being done for decades in Multinationals!

    Luckily the GOOG isn’t as dependent on share holders as Apple is with few shares held locally anymore. If Apple’s market with only 2 models of mobile devices bringing in 80% of profits and revenue, they’re the ones people should be worried about. Google is one hell of a lot more diversified than Apple ever thought of being!!!