Google’s 3Q Results Better Than Expected, Despite Big Spending
Google's Headquarters
Google is well known for the huge number of acquisitions it has finalized this year. The reason for that is simple, the company can afford to spend a lot. While some companies are still struggling to pull out of a tough economic period, Google’s investors seem to be quite pleased. The search engine giant has expanded its advertising empire immensely throughout this summer. This is further confirmed by Google’s third quarter results, released on Thursday.
According to AP, ned income surged 32 percent and surpassed analyst estimates. They would have been even higher if Google’s management team hadn’t decided to add a significant number of new members, make a large number of acquisitions and invest a lot in equipment. Because of this liberal shopping Google did, most investors were worried during the first period of the year. This lead to a decrease in stock price. During the third quarter, however, Google’s shares grew to $49.07 or more than 9 percent in Thursday’s extended trading after finishing the regular session at $540.93.
One thing that greatly contributed to the soaring of Google’s shares was the data the company showed regarding previous investments that were starting to pay off. This was the first time the company has ever provided such details. Display advertising seems to have accounted for almost 10 percent of ad revenue in the quarter while mobile advertising constituted 4 percent. Despite it being a pretty small piece of Google’s business, mobile advertising is believed to bring in even more ad revenue in the future, than computers in homes and offices will.
There’s plenty of reason to believe this. Consumers are slowly starting to get the appeal of Internet on their mobile phones. There’s only so much time you can spend at home, on your computer, but considerably more time you can spend on your mobile phone browsing random sites. You can do that while commuting, in your lunch break at work and much more. Most recent reports proved that some people are actually spending more time on some services on their mobile phones than on their home computers. That’s why advertising on mobile has a lot of potential right now.
For the time being, the text links placed above or to the side of search results are still Google’s main source of revenue. They totaled $7.3 billion which represents a 23 percent increase from last year. According to Google’s executives, the ads are turning into even bigger money makers since the company invested in Google Instant, the new search engine which will display search results even before you’re done typing the whole query. Instant Search comes up with results quicker than ever before. Because of this, people seem to be doing a lot more searching and are, as a consequence, generating more advertising opportunities.
“This is the best performance they’ve had in three years. We’re back to the old Google we know and love,” said RBC Capital Markets analyst Ross Sandler.”Clearly search is holding up better than anyone expected,” while efforts to branch into display and mobile advertising are on track to become significant parts of the business, he noted.
Google’s Q3 earnings went up to $2.2 billion, around $6.72 per share, from the $1.6 billion or $5.13 per share recorded a year earlier. Not taking certain expenses into account, the company managed to earn $7.64 billion, a whole lot more than the $6.69 analysts expected. Because things were clearly going well, Google decided to add 1,500 workers throughout the quarter, which was the highest number in a three-month period since the start of 2007 when it added over 2,100 employees. And, of course, the company has announced 24 acquisitions so far, possibly with more to come before the end is over. During the third quarter Google has also released plenty of new products and taken some others off the market. It’s clear that it was a great third-quarter for the search engine giant and things are probably about to get even better as the holiday season begins, and now that the Google TV sets are out.11
