Internet giant Google Inc. (GOOG: Quote), said Thursday its second quarter profit increased from last year as strong growth at its search advertising business spruced up revenues. Google's quarterly earnings easily topped Street estimates, while revenues were short of expectations. Google shares are currently up 3.2 percent in after-hours trade on the Nasdaq.
CEO Larry Page said, "Google standalone had a strong quarter with 21% year-on-year revenue growth, and we launched a bunch of exciting new products at I/O - in particular the Nexus 7 tablet, which has received rave reviews."
Google's revenues for the quarter were up 35 percent, year-over-year. This includes contribution from Motorola Mobility which Google acquired in May, but the business ran an operating loss.
Google's mainstay advertising revenues for the quarter were up 21 percent from last year.
Aggregate paid clicks, which include clicks related to ads served on Google sites as well as sites of its AdSense partners, grew 42 percent year-over-year.
Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of AdSense partners, decreased about 16 percent from last year.
According to a recent data by comScore Inc. (SCOR), Google Sites led the U.S. explicit core search market in June with 66.8 percent of search queries conducted, followed by Microsoft Corp. (MSFT) with 15.6 percent and Yahoo! Inc. (YHOO) with 13.0 percent.
Google, which continues to dominate the Internet search market, has been venturing into areas outside its traditional search business. The company in June unveiled its small tablet "Nexus 7" in a bid to grab a share of a humongous market dominated by Apple Inc.'s (AAPL) iPad, as well as Amazon.com Inc.'s (AMZN) Kindle Fire.
Microsoft recently jumped into the fray, unveiling its "Surface" tablet that will run on a new operating system.
Google's Nexus 7 tablet will run on Jellybean, its newest version of Android operating system. The device costs $199, much cheaper than the $499 an iPad costs.
While Google's Android mobile operating system has grabbed a discernible share of the smartphone market, tablets based on its software are yet to unsettle iPad's dominant position that has a near two-third market share. Google's acquisition of Motorola Mobility, a maker of Android smartphones and tablets, is expected to help it create better Android devices.
Mountain View, California-based Google reported second quarter net income of $2.79 billion or $8.42 per share, compared to $2.51 billion or $7.68 per share last year.
Excluding items, adjusted earnings for the quarter were $3.35 billion or $10.12 per share, compared to $2.85 billion or $8.74 per share in the prior year.
On average, 29 analysts polled by Thomson Reuters expected earnings of $10.04 per share for the quarter. Analysts' estimates typically exclude special items.
Consolidated revenues for the quarter were $12.21 billion, compared to $9.03 billion last year.
Advertising and other revenues rose 21 percent from last year to $10.96 billion and comprised 90 percent of total business.
Traffic Acquisition Costs, or TAC, for the quarter was $2.60 billion, compared to $2.11 billion last year. TAC is the portion of revenues Google shared with its partners.
Excluding TAC, revenues jumped to $8.36 billion from $6.92 billion a year ago. Twenty-seven analysts expected revenues of $8.41 billion.
Revenues from Google-owned sites were up by 21 percent to $7.54 billion in the quarter, while revenues from Google's partner sites rose 20 percent to $2.98 billion.
Revenues from outside of the U.S. were $5.96 billion, representing 54 percent of total revenues in the quarter.
Motorola Mobility revenues were $1.25 billion, accounting for 10 percent of consolidated revenues in the quarter, even as the business reported an operating loss of $233 million.
Google's operating margin for the quarter receded to 26 percent from 32 percent a year earlier, partly due to the impact of Motorola Mobility.
GOOG closed Thursday at $593.07, up 2.12%, on a volume of million shares. In after hours, the stock further gained $18.12 or 3.06%. In the past year, the stock has traded in a range of $480.60 - $670.25.
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by RTT Staff Writer
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