Google Inc’s first-quarter earnings growth faltered as the Internet’s most influential company grappled with a persistent downturn in advertising prices while spending more money to hire employees and invest in daring ideas.
The results announced on Wednesday fell below analyst projections.
Google’s Class A stock shed US$17.10, or 3 percent, to US$546.80 in extended trading.
Although it remains among the world’s most profitable companies, Google is struggling to adjust to a shift away from desktop and laptop computers to smartphones and tablets. The upheaval is lowering Google’s ad rates because so far marketers have not been willing to pay as much to pitch to consumers using smaller screens on mobile devices.
Google earned US$3.45 billion, or US$5.04 per share, in the quarter. That was up 3 percent from US$3.3 billion, or US$4.97 per share, last year.
Revenue rose 19 percent from last year to US$15.4 billion.
After subtracting advertising commissions, Google’s revenue stood at US$12.2 billion — about US$200 million below analyst projections.
Google’s average rate for ads appearing alongside its search results fell 9 percent from last year.
It marked the 10th consecutive quarter that the company’s “cost-per-click” has declined from the previous year.
As its advertising prices sagged, Google’s operating expenses shot up 31 percent from last year to US$5.3 billion. The rise included the addition of about 2,300 employees, the biggest three-month rise in the company’s workforce since buying Motorola Mobility for US$12.4 billion nearly two years ago.
Google is in the process of selling Motorola to Lenovo Group (聯想) for US$2.9 billion. The unit lost US$198 million in the first quarter, extending a streak of uninterrupted losses under Google’s ownership.
Some of the employee and operating expense rise stemmed from Google’s US$3.2 billion purchase of high-tech home appliance maker Nest Labs, Google chief financial officer Patrick Pichette said.
The first-quarter results were further muddied by a recently completed stock split that created a new category of Class C shares, which hold no voting power. The split cut Google’s per share earnings in half to reflect a doubling of the company’s outstanding stock.
“It was a noisy quarter, but nothing to hit the panic button about,” Edward Jones analyst Josh Olson said.
As has been the case for years, Google is also spending heavily on a variety of projects that have little to do with its main business of Internet search and advertising. Some of these ventures, such as Google’s widely used Android operating system and Chrome browser, have paid off. Others, including Google’s Internet-connected eyewear, driverless cars and Internet-beaming balloons, remain in testing stages.
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