Google posts $50bn year, but Motorola racks up losses
By Reuters and Nicole Kobie
Posted on 23 Jan 2013 at 09:50
Google has posted $50bn in revenue for the year after another record quarter, but its Motorola handset business has again failed to post profit.
Excluding traffic-acquisition costs, the business reported net revenue of $9.83 billion, up from $8.13bn a year earlier, and a quarterly profit of $2.89bn.
"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."
Revenue from Google's core internet business outpaced many analysts' expectations during the crucial holiday quarter and advertising rates fell less than in previous periods.
We hit $50 billion in revenues for the first time last year – not a bad achievement in just a decade and a half
"Business looked really strong, especially from a profitability perspective. It really grew its margins in the core business," said Sameet Sinha, an analyst with B. Riley Caris. "Most of that strength seems to be coming from international markets which grew revenues quite substantially: up 23% year over year, versus the 15% growth in the third quarter."
Average cost-per-click, a critical metric that denotes the price advertisers pay Google, declined 6% from a year ago, the fifth consecutive quarter of decline but an improvement over the third quarter's 15% slide.
Google executives told analysts on a conference call that policy changes related to the quality and quantity of ads appearing on certain of its web properties had helped shore-up click prices while lowering the overall growth rate of paid clicks in the holiday quarter.
The decline in Google's click prices is partly a result of consumers' shift to smartphones, where Google's ad rates are lower than those on Google's standard website.
Asked about the potential threat from Facebook's recently-launched social networking search product, Page cited Google's years of online search experience and innovations such as voice-based search.
Motorola still losing money
Investors shrugged off a quarterly loss of $353m at the Motorola Mobility mobile phone business Google acquired last year, one of various "big bets" that Page has made to better position the company for a changing technology landscape defined by mobile gadgets and social networking.
"We now live in a multiscreen world," said Page, adding that "we feel naked without our smartphone".
Page said that Google had work to do in "managing our supply better as well as building a great customer experience," but said Google remains squarely focused on opportunities around smartphones.
The company posted consolidated revenue - which includes its Motorola Mobility mobile phone business but not the television set-top box business it recently agreed to sell - of $14.42bn.
Google CFO Patrick Pichette warned of more fluctuations in Motorola's financial results in the coming quarters as Google continues to restructure that business.
And he noted that Google was working through 12 months to 18 months of product pipeline that Google inherited in the acquisition.
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