Google Inc (GOOGL) Fourth Quarter Revenue Not Up To Wall Street

Google (GOOG)

Google Inc (NASDAQ:GOOGL) reported its fourth quarter results on Thursday, posting a growth slowdown of 10 percent as against comparable period of the previous year, trailing behind results from other tech giants including Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB). The report raised concerns that the search giant is into many businesses all at once, veering away from its main business in the first place, that of selling ads alongside its internet search service.

For the quarter ended December 31, Google Inc (NASDAQ:GOOGL) recorded a gross revenue of $18.10, up from $15.71 billion for the comparable period a year ago, but missing estimates of $18.46 billion from analysts polled by Reuters. Excluding payments due to companies syndicating its ads, revenue falls at $14.5 billion, a growth of 17 percent over the $12.4 billion revenue for the same period last year. Research and development costs went up from $2.1 billion to $2.8 billion for the same quarter a year ago. Net income is at $4.8 billion, 41 percent up from $3.4 billion last year, or from $4.95 per share to $6.95 per share. Excluding special items, earnings is pegged at $6.88 per share.

Google (GOOG)While a substantial portion of its gross revenue came from advertising, up from $14.1 billion to $16.2 billion for the year-on-year quarter, it raises concern regarding how Google Inc (NASDAQ:GOOGL) will transition this business model to the mobile world. Ads served on mobile devices don’t generate as much cash as it does on desktop computers. Google’s “cost per click” (CPC), which represents average payment each time a user clicks an ad, has been on continuous decline, and was down 3 percent further for last year. On top of that, Google is also facing stiff competition from Facebook in mobile advertising.

Still, Google Inc (NASDAQ:GOOGL) enjoys 71.6 percent share of the total spending on search advertising in the United States according to eMarketer, The New York Times reports. Google reported that revenue in its “other” category is at $1.95 billion, up 19 percent from the comparable period of the previous year. “Other” category include Play Store, where users can purchase apps and other digital goods. In a conference call with analysts, Google did not offer answers to queries regarding its other businesses, but according to RBC Capital Markets Mark Mahaney, investors are also interested to know more about “Google Play, YouTube, Google for work.”

This article has been written by Nonito Guntan.

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