Google Continues to Surge on Earnings

Andrew Klips  |

Shares of Google Inc. (GOOG) are up over 6 percent in the early session. Google was also traded actively on Tuesday with more about 3.5 million shares changing hands as investors speculated about earnings to be delivered after the closing bell.  Over the past three months, Google has averaged trading 2.39 million shares per day.

Those who bet bullish by snagging some shares at intraday lows below $700 each – marking the first time since the last trading day of 2012 that level was breached – weren’t disappointed with the earnings report.

The search engine behemoth said that it notched a fourth-quarter profit of $2.89 billion, or $8.62 per share, compared to $2.71 billion, or $8.22 per share, in the year prior quarter.  On an adjusted basis, the company recorded profits of $10.65 per share in the fourth quarter.

Revenue, excluding traffic acquisition costs, totaled $11.34 billion, up from $8.13 billion in Q4 2011.

The earnings figure topped Wall Street analyst expectations of profit of $10.47 per share, although the revenue figure was less than the $12.34 billion that analysts predicted.

The earnings were consolidated to include its legacy business and its Motorola Mobility mobile phone operations, but not Motorola Home, the cable television set-top box business that it agreed in December to sell to Arris Group, Inc. (ARRS) for $2.35 billion.  Google acquired that arm of is business when closed the acquisition of Motorola Mobility in May.

Advertising revenue surged 22 percent from the year prior quarter to $12.91 billion, or 89 percent of consolidated revenue.  The increase in advertising revenue came as cost-per-click, a key metric that shows how much advertisers are paying Google, declined by 6 percent, it’s fifth straight quarterly decline.

Motorola Mobile revenues were $1.51 billion, or 11% of consolidated revenues in the fourth quarter of 2012.

Revenue minus traffic acquisition costs was $11.34 billion, a sharp increase from $8.13 billion the year earlier quarter.

We ended 2012 with a strong quarter,” said Larry Page, CEO of Google. “Revenues were up 36% year-on-year, and 8% quarter-on-quarter. And we hit $50 billion in revenues for the first time last year – not a bad achievement in just a decade and a half.

The Google chief certainly wasn’t wrong in that comment, especially after turning the books around following Google posted weaker than expected revenue the third quarter.  The company looks to be overcoming hurdles related to companies vying for advertising space on mobile devices as the paradigm shift away from PC’s and laptops continues.  Google makes less on these types of advertisements, but is apparently making up for it in volume to maintain healthy profit margins.

Shares cruised nearly 5 percent higher in after hours trading on Tuesday and will be closely watched on Wednesday.

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