Even with falling prices of ads, Google’s second quarter 2012 financial results managed to look good, with net income reported to rise by at $2.79 billion for the quarter ending June 30, 2012. In you are out into stock market, trading GOOG stocks – the earning is $8.42 for each share. This saw a small leap from the last year’s quarter, that reported net income of $2.51 billion or $7.68 for each share. Stock market is expected to react negatively to the results.
The accounting costs of the company for compensation for employee stock and the acquisition of $12.5 billion by Motorola Mobility brought the income down from what could have been $10.12 each share. Analysts of Wall Street were expecting $10.12 for each share.
The silver lining is the revenue that shot up by 35% from its last year’s to $12.21 billion during the second quarter of 2012, even when each click on Ads ( its main source of revenue) brought fewer cents than it did a year ago. In the absence of Motorola, this would have been a rise of 21%, making it stand at $8.36 billion, excluding the ad commissions due to its advertising partners.
Larry Page, the exuberant CEO, stated that Google had a good quarter with a revenue growth of 21% each year, and it has now released a series of exciting fresh products at the I/O, such as the Nexus 7 tablet, which has seen some rave reviews. With Motorola joining in the Google Family, this quarter becomes all the more special with a renewed excitement regarding the creation of amazing new devices for its users. Nexus 7 is being seen as a worthy competitor of the Amzon’s kindle and Apple’s iPad. Its $199 price tag is not expected to generate any profit but will add to its revenue and make future profit through the adoption of Android.
The ability of Google to to target its ads to the audience in a better manner ( by potentially tracking the controversial user search and browsing pattern) has resulted in this increased earning report. Now that it has found out a method to direct its ads at audiences to appease them better, there is an evident rise in the number of ad clicks in the second quarter. Compared to that of last year, the number of ad clicks increased by a delightful 42%, recording a new annual increment high ever since the reporting of its ad clicks began 4 years ago.
However, although the number of ad clicks has risen, the prices of ads have fallen steeply. The average rate of each click fell by a 16% as compared to the previous quarter a year ago. This is owed to the fact that the ad prices on tablets and smart phones is a lot cheaper compared to desktop PCs, which is coupled with the increasing trend towards mobile devices.
One other issue that Google had to brave was the Motorola Mobility, which results in a loss of revenue by $233 million on an income of $1.25 billion. Google was able to take the company over just a period of 39 days before the quarter ended.
Even though troubles seem to bar its path, Google is still faring quite well by itself with the Nexus 7 tablet and the Android OS for mobiles. The tablet has created a sensation ever since its release and has been selling like pancakes in the market in even the very few days.