Sat, Oct 19, 2013 - Page 15 News List

Google’s results beat forecasts as ad revenue up

Reuters, SAN FRANCISCO

Google Inc’s quarterly results beat Wall Street’s expectations as the Internet search giant expanded its mobile and overseas businesses while keeping advertisement rate declines in check, sending its shares to a record high.

The market reaction put Google’s stock within striking distance of US$1,000, following what analysts said was a strong, but not spectacular quarter.

Shares of the world’s No.1 Internet search engine jumped 8 percent to US$959.65 in after-hours trading on Thursday, after it reported a 23 percent rise in revenue from its Internet business, excluding fees paid to partners, of US$10.8 billion in the third quarter.

“Expectations going into earnings were a little muted,” Needham & Co analyst Kerry Rice said. “They did what they needed to do to impress investors.”

Google’s business, like rivals Facebook Inc and Yahoo Inc, has come under pressure as more consumers access its online services on mobile devices such as smartphones and tablets, where advertising rates are lower than on PCs.

The average cost-per-click — the price that marketers pay Google when consumers click on their ads — decreased 8 percent during the third quarter, deepening the 6 percent price erosion that Google experienced in the second quarter.

Yet the total amount of paid clicks increased 26 percent year-on-year during the three months ended Sept. 30, the highest rate of growth in one year.

“That’s the key story, their ad volume growth is outpacing the decline in cost-per-clicks,” JMP Securities analyst Ronald Josey said.

About 40 percent of traffic to YouTube now occurs on mobile devices, Google chief executive Larry Page said on Thursday. Two years ago, 6 percent of YouTube’s traffic occurred on mobile devices.

“Google’s done a good job of being in the right place in mobile as it grows, and being able to monetize that,” Rice said.

Google’s results offered a sharp contrast to online rival Yahoo Inc, which reported a slight dip in quarterly revenue on Tuesday and lowered its financial outlook.

On Thursday, co-founder and CEO Page told analysts he will no longer be joining the company’s quarterly earnings conference calls on a regular basis.

“I know you all would love to have me on, but you’re also depending on me to ruthlessly prioritize my time for the benefit of the business,” Page said, without elaborating further the change.

Page, who with Sergey Brin, conceived of what is today the world’s most-used Internet search engine, is not known for assiduously courting Wall Street investors and this year, Page revealed that his vocal cords are partially paralyzed as the result of a rare medical condition.

Rice said he did not expect Page to be any less involved in running the company, noting that Amazon.com Inc CEO Jeff Bezos does not participate in the quarterly earnings calls.

Google executives also provided few details on the recently launched MotoX smartphone, the flagship device within Google’s Motorola mobile phone business.

Operating losses at Motorola were US$248 million during the third quarter, compared with a loss of US$192 million in the third quarter of last year.

Google’s consolidated business earned US$2.97 billion, or US$8.75 per share in the three months ended Sept. 30, compared with US$2.18 billion, or US$6.53 per share, last year.

Excluding certain items, Google said it earned US$10.74 per share, compared with the US$10.34 that analysts were expecting, according to Thomson Reuters.

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