Google's fourth-quarter results shine after ad rate decline slows

Tue Jan 22, 2013 8:27pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Alexei Oreskovic

SAN FRANCISCO (Reuters) - Revenue from Google Inc's core Internet business outpaced many analysts' expectations during the crucial holiday quarter and advertising rates fell less than in previous periods, pushing its shares up roughly 5 percent.

The world's largest Internet search company introduced new product listings during the fourth quarter - typically its strongest - and also benefited from business growth in international markets, analysts said.

Excluding traffic-acquisition costs, the business generated net revenue of $9.83 billion, up from $8.13 billion a year earlier, Google reported on Tuesday. That surpassed a $9.6 billion average forecast from six analysts polled by Reuters.

"Business looked really strong, especially from a profitability perspective. They really grew their 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 percent year over year, versus the 15 percent growth in the third quarter."

Average cost-per-click, a critical metric that denotes the price advertisers pay Google, declined 6 percent from a year ago, the fifth consecutive quarter of decline but an improvement over the third quarter's 15 percent 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.

"Click prices are still declining, but it's better than expected," said BGC Partners analyst Colin Gillis.

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.   Continued...

 
An employee rides her bike past a logo next to the main entrance of the Google building in Zurich in this July 9, 2009 file photo. REUTERS/Christian Hartmann/Files