Internet search giant Google reported better than expected earnings after the close of the market on Tuesday, sending shares of the company soaring more than $37 in after hours trading. The reason for the big jump in price was that revenues from the Holiday season far exceeded expectations.
Fourth quarter profit rose to $10.65 a share, where analysts had projected the EPS to be slightly less than $10.5. Analysts had underestimated the e-commerce share of advertising markets during the last two months of 2012.
The retailer’s ads put 14% more money into web based retail advertising than they did in 2011.
The increase in web based ads helped compensate for the still evolving mobile advertising market, which is showing positive results but is not a finished product at this time. Rates for mobile ads can run at a discount of as much as 50% for promotion vs. desktop units.
The “cost per click” has decreased by more 16% from the second quarter of 2012. The total number of clicks advanced by more than 38% for the last quarter of 2012, when compared to the previous quarter.
Revenue, excluding sales passed on to various partner tie-ins, was $12.2 billion, which was down slightly from the second quarter. Revenues from operations, excluding the Motorola Home set-top box unit, which Google agreed to sell last month, were $14.4 billion.
Android, which is provided for free to manufacturers, has become a key part of the company’s push into mobile, giving Google access to user data around the world. Android snared 72 percent of the global smartphone market in the third quarter, according to Gartner Inc.
So where does Google go from here?
It is already the largest company in the world and it appears to be headed even higher. This is exactly the same course Apple took last year when it became the world’s largest company on iPhone earnings, only to see its stock decline almost 30% in the last quarter.
As they say in the real estate business “buyers beware”, nothing is ever as good as it seems!
Keep those stops tight.
Todd “Bubba” Horwitz