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Google shares rise as Q4 results top views on increased advertising

23rd Jan 2013, 8:49 am by Carrie White
Search engine giant Google's shares are higher today after it posts fourth quarter results that top analyst views. Search engine giant Google's shares are higher today after it posts fourth quarter results that top analyst views.

Shares of Google (NASDAQ:GOOG) rose over five per cent in premarket trading Wednesday, as the search engine giant posted fourth-quarter earnings and sales that topped analysts’ expectations.

Google, which reported its fourth quarter results after the bell Tuesday, saw its shares rise 5.14 per cent as at about 8:45 a.m. EDT, trading at $739.03.

For the quarter that ended December 31, the company posted net income of $2.89 billion or $8.62 per share, compared to $2.71 billion to $8.22 per share in the year-ago period.

Google noted that reported income excluded stock-based compensation expense, as well as restructuring and charges related to the sale of its Motorola Home business, which was reported as a separate line item.

The internet giant, which agreed to buy Motorola Mobility in 2011 for $12.5 billion, this past December announced it would sell Motorola Home for $2.35 billion. The transaction is expected to close in 2013.

Adjusted income for the quarter was $3.57 billion or $10.65 per share, compared to $3.13 billion or $9.50 per share in the year-ago quarter.

Revenues were $14.42 billion, an increase of 36% compared to $10.58 billion a year earlier.

Analysts polled by Thomson Reuters had expected per share earnings of $10.52 on revenues of $12.36 billion.

“We ended 2012 with a strong quarter,” said CEO Larry Page. 

“Revenues were up 36 per cent year-on-year, and eight per cent 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. 

“In today’s multi-screen world we face tremendous opportunities as a technology company focused on user benefit.”

The company’s advertising revenues were $12.91 billion, or 89 per cent of consolidated revenues, in the fourth quarter, a 22-per-cent increase over $10.58 billion a year ago.

Google-owned sites posted revenues of $8.64 billion, an 18-per-cent increase over $7.29 billion in the year-ago period. Network revenues from partner sites stood at $3.44 billion, up 19 per cent from $2.88 billion.

Other revenues were $829 million, more than double the year-ago revenues of $410 million.

Google revenues from outside of the U.S. totalled $6.9 billion, up 23 per cent from $5.6 billion a year earlier. The company’s UK unit posted revenue of $1.30 billion, up 22 per cent year-over-year.

Paid clicks, a measure of how frequently consumers click on Google's advertisements, increased about 24 per cent year-over-year, while the average cost-per-click fell roughly six per cent.

The decline comes mostly as a result of increased use of Google's search engine on phones and Page said that he believes the company’s ability to drive revenue through mobile devices will improve. 

Traffic acquisition costs (TAC), or the portion of revenues shared with Google’s partners, increased to $3.08 billion, compared to $2.45 billion a year earlier. 

The company’s Motorola Mobile business reported revenues of $1.51 billion.

Capital expenditures for the quarter were $1.02 billion, the majority of which was for production equipment, data center construction and facilities-related purchases. Google said it expects to continue to make “significant capital expenditures” in the future.

As of the quarter’s end, the company had cash, equivalents, and marketable securities totalling $48.1 billion.

“The success of our products and our continued strong performance continues to give us the confidence to fund our strategic growth in areas such as search, YouTube, Android, Chrome as well as in our overall infrastructure with a view to the long-term,” said senior VP and CFO Patrick Pichette.

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