Google Q1 2014 Earnings: Profits Up as CPCs Slide

Google Revenues by Source Q1 2014

Google has revealed profits for the first quarter of 2014 of $3.45 billion, up from $3.35 billion in the same period last year, but its average cost-per-click income has fallen, causing concern among investors.

While paid clicks increased 26 percent year-over-year (YoY) (and were down 1 percent compared to Q4 2013), Google said that the cost-per-click income fell by 9 percent year-over-year and was unchanged from Q4. This concerned investors, with shares in the firm falling by as much as $20 in pre-market trading.

The worries stem from questions over whether Google can generate the same income from mobile advertising clicks as it does from desktop adverts, at a time when smartphones and tablets are growing in use all the time.

However, Google chief business officer Nikesh Arora said in a conference call to discuss the results that he was confident income for mobile advertising would increase as firms understand the benefits of mobile-based selling.

“I believe the medium- to long-term mobile pricing has to be better than desktop pricing. And I think the reason – the way to think about it is that in mobile you have location and you have context of individuals, which you don’t have in the desktop.

“Part of our challenge has been that. We’ve had this huge massive advertiser in the desktop, which over the last decade have become better at advertising, understanding optimization, understanding conversion, understanding transaction. That journey is just beginning for advertisers on the mobile side.”

Google CEO Larry Page was also upbeat on the results, as he focused on the strong revenue growth over the past 12 months. “We completed another great quarter. Google’s revenue was $15.4bn, up 19 percent year on year. We got lots of product improvements done, especially on mobile. I’m also excited with progress on our emerging businesses,” he said.

Google also noted that its proposed sale of Motorola to Lenovo for $3 billion, a significant loss compared with the $12.5bn it paid for it, impacted its overall performance. The firm racked up $198m losses from discontinued operations, with $74m pre-tax losses attributed to Motorola.

Google also revealed it now has a cash balance of almost $60 billion and just shy of 50,000 employees worldwide. With its impending sale of Motorola to Lenovo, though, this could decrease in the coming months.

This article was originally published on V3.

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