Google profits disappoint as growth slows

30/01/2015

Google reported fourth-quarter profits of $4.76bn (£3.16bn), up nearly 30% from the same period a year before, but revenue missed Wall Street expectations.

The company's revenue increased by 15% to $18bn, nearly the same amount as Apple's actual profit last quarter.

It said revenues would have been $541m higher had foreign exchange rates been more favourable.

The cost-per-click - or the amount Google can charge advertisers for placing ads on its network - decreased by 3% over the quarter, indicating that Google is still having difficulty raising the price it charges for mobile ads.

The growing popularity of mobile devices has made leading social network Facebook a greater threat in the battle for advertisers.

Facebook reported on Wednesday that mobile ads on its network doubled year-over-year during the fourth quarter.

Google shares fell immediately following the results in after-hours trade on Thursday, but later recouped the losses and traded up 0.3 per cent.

Some analysts pointed out that Google results were dented by a strong US dollar, reducing the value of income earned outside the United States.

Even though Google is the leader in online advertising and search, it faces increased competition and has been diversifying in services and investing in projects such as Google Glass and self-driving cars.

Google said this month it was halting sales of its internet-linked eyewear Glass but insisted the technology would live on in a future consumer product.

Instead of being part of the Google X lab working on innovations such as self-driving cars, the Glass team will become a separate unit answering to Tony Fadell, co-founder of Nest.

Google bought the smart thermostat-maker early last year in a multibillion-dollar deal and brought the former Apple executive on board in the process.

The metric is closely watched by investors, who worry that the firm's mobile ad business is not as strong as its desktop search business - which is troubling, given that consumers are increasingly switching to accessing the internet on their smartphones and mobile devices.

Google shares dipped nearly 2% in trading after markets had closed, but recovered later in the evening.

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