Google's Q3 beats as ad volume grows, stock flirts $1,000 level

SAN FRANCISCO Fri Oct 18, 2013 5:20am IST

A Google logo is seen at the entrance to the company's offices in Toronto September 5, 2013. REUTERS/Chris Helgren/Files

A Google logo is seen at the entrance to the company's offices in Toronto September 5, 2013.

Credit: Reuters/Chris Helgren/Files

Related Topics

Stocks

   

SAN FRANCISCO (Reuters) - Google Inc's (GOOG.O) quarterly results beat Wall Street's expectations as the Internet search giant expanded its mobile and overseas businesses while keeping ad-rate declines in check, sending its shares to a record high.

The market reaction put Google's stock within striking distance of $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 $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 $10.8 billion in the third quarter.

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

Google's business, like rivals Facebook Inc (FB.O) and Yahoo Inc (YHOO.O), 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.

But the total amount of paid clicks increased 26 percent year-on-year during the three months ended September 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," said JMP Securities analyst Ronald Josey.

Roughly 40 percent of the traffic to YouTube, the Google-owned video website, now occurs on mobile devices, Google Chief Executive Larry Page said on Thursday. Two years ago, only 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," said Rice.

He also pointed to Google's 28 percent revenue growth outside of the U.S. and Britain as further signs of Google's strength.

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.

NO MORE ANALYST CALLS FOR PAGE

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 providing further explanation for 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.

Needham & Co's Rice said he did not expect Page to be any less involved in running the company, noting that Amazon.com Inc's (AMZN.O) 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 $248 million during the third quarter, compared to a loss of $192 million in the third quarter of 2012.

Google's consolidated business earned $2.97 billion, or $8.75 per share in the three months ended September 30, compared to $2.18 billion, or $6.53 per share, last year.

Excluding certain items, Google said it earned $10.74 per share, compared to the $10.34 that analysts were expecting, according to Thomson Reuters I/B/E/S.

Consolidated revenue of $14.89 billion compared with the $14.79 billion average analyst estimate.

(Reporting by Alexei Oreskovic; Editing by Bernard Orr)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Public Health

REUTERS SHOWCASE

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Airtel Profit Jumps

Airtel Profit Jumps

Bharti Q2 net profit more than doubles   Full Article 

Leisure Riding

Leisure Riding

Harley-Davidson woos affluent young Indians with bike culture  Full Article 

Maruti Earnings

Maruti Earnings

Maruti Suzuki net profit up 29 percent, beats estimates.  Full Article 

ICICI Results

ICICI Results

ICICI Bank Q2 profit up 15 percent, beats estimates.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

End Of QE

End Of QE

U.S. Fed ends bond buying, exhibits confidence in U.S. recovery.  Full Article 

Cook Comes Out

Cook Comes Out

Apple's Cook: "I'm proud to be gay"  Full Article 

Refining Margins

Refining Margins

BPCL aims to double refining margins with refinery expansion.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage