Strong advertising sales and cost controls boosted Google Inc’s 3rd quarter results, its profit up by 26%, its revenue by 37%. The damp economic outlook more so in Europe caused advertising growth fears. However, Google’s profit and paid-clicks results brought positive 4th quarter outlook. Macquarie Research analyst Ben Schachter said softness in Western Europe is starting to be seen but it’s being more than made up for by the broader distribution of their products in mobile and the fact that emerging markets are becoming more and more important.
Google shares closed at $594.01 in extended trade, higher by 1.91% on Nasdaq. Stock was off almost 8% from its 52-week high of $642.96 due to growing regulatory scrutiny fears and fears of uncontrolled spending as Google tightens rivalry with Apple Inc and Facebook. Analyst Brian Pitz said expenses as well as R&D were less than what Wall Street expected. He added that this is the 4th quarter in a row that Google had accelerated revenue. CEO Larry Page said he was cutting Google’s extensive projects portfolio and redirect resources to more profitable businesses. They have already shut over 20 products. Major Google resources go to booming mobile business competing toughly with Apple’s iPhone. So far, Google’s smartphone platform which powers 190 million devices from 135 million in July is thrusting forward fast. According to Page, the company’s mobile business profit jumped from $1 billion a year ago to over $2.5 billion.
Google said it intends to acquire Motorola Mobility Holdings for $12.5 billion and the deal may be finalized if not this year, early next year. Google will have the opportunity to develop its own smartphone line. Analysts fear that Google might fall into a low-margin business due to its lack of experience. Building its own phone line might put its free Android mobile software at risk against phone manufacturers like Samsung Electronics and HTC Corp. Plans for Motorola was not tackled on Thursday’s executives’ meet but Google said it would be treated separately. Page mentioned Microsoft Corp’s legal battle against companies that sell Android devices, saying its harassment to one’s own customers.
Google’s 3 months’ net income ended September 30 was up to $2.73 billion from $2.17 billion in the year-ago period. Minus some products, it earned $9.72 per share in Q3. Analysts expect an adjusted EPS of $8.74. The company’s newly-launched Google+, a social networking service that challenges Facebook, is being observed by investors. Google+ gained 10 millions uses on its first 2 weeks. Page said over 40 million users have signed up recently with over 3.4 billion photos uploaded. Google’s Q3 net revenue, minus fees that the company shares with partner websites, was 37% up on year-on-year to $7.51 billion. Analysts expected $7.22 billion in net revenue.