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# Google Makes $3B Profit, but It's Not Enough for the Street

By Chris Preimesberger | Posted 2013-07-18 Email Print

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Total revenue grew 19 percent from the year-ago quarter to $14.11 billion, and the Web services giant banked $3.2 billion in profit.

Logic would dictate that Google, which posted a quarterly profit of $3.23 billion July 18 in its Q2 2013 earnings report, ought to be rewarded by stockholders and analysts for a job well done.
Well, the job obviously was well done, but the Mountain View, Calif.-based search and Web services giant wasn't rewarded with any sort of stock price raise. In fact, Wall Street shook its head at the good news and docked Google. The company reported adjusted earnings per-share of $9.56, which is certainly healthy for any company, but for Google, it also was down from a year earlier. Investors expected more than that -- about $1.30 more, in fact. Total revenue grew 19 percent from the year-ago quarter to $14.11 billion. The stock closed at $910.68 but slipped $37, or about 4 percent, in after-hours trading to $873.50. Google’s position during the conference call was that the earnings fell short of expectations due to a continued overall drop in ad prices. The company reiterated what it has said for the last several quarters, contending that it will continue to invest in its core products, and that it expects to do better on mobile ads as more companies sign up with it.
Mobile ads, which are the hardest for Web companies to sell and are limited by the small screen sizes of smartphones, are already at least 40 percent lower than prices for ads served to desktop screen. But advertising prices fell about 6 percent overall in the quarter -- far more than the 3 percent analysts expected and the 4 percent drop that occurred in the first quarter.
Google CEO and co-founder Larry Page described the mobile ads problem as something the company isn't particlarly worried about and will eventually overcome. "Google had a great quarter with over $14 billion in revenue – up 19 percent year-on-year," Page said on the conference call to analysts. "The shift from one screen to multiple screens and mobility creates tremendous opportunity for Google. With more devices, more information, and more activity online than ever, the potential to improve people’s lives even more is immense."
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