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Google Q4 2012 Earnings: Average Cost-Per-Click Declined 6%, Mobile Business Continued To Struggle !
Over the past few weeks, there has been a discussion about Google Q4 2012 earnings. Today right on schedule, Google finally released its quarter-fourth earnings for the fiscal 2012. The company has reported revenues of $14.42 billion for the quarter ending December 2012, up 36% compared to the same quarter of the last year.
Google Q4 2012 Earnings
In Q4 2012, Google’s Non-GAAP earnings per share (EPS) was $10.65, up from $9.50 in the Q4 2011. Besides, GAAP net income (including net loss from discontinued operation) was $2.89 billion in Q4 2012, up from $2.71 billion in the same quarter of the previous year. More importantly, Google sold Motorola Home – the broadband unit of Motorola Mobility to Arris in December last year for $2.35 billion (which includes $2.05 billion in cash and about $300 million in newly issued Arris shares).
Once again, Google was cautious to explain Motorola’s situation in its press release. However, the company has reported a robust quarterly earnings (ending December 2012), revenues were up 36% Y/Y and 8% Q/Q. Apparently, it succeeded to generate a revenue of $50 billion for the first time in 2012. As per Google Q4 2012 earnings report, the company’s traffic acquisition costs surged to $3.08 billion in Q4 2012, compared to $2.45 billion in the Q4 2011.
In Q4 2012, Paid-Click, which includes ad related clicks on Google sites and the sites of its network members, rose 24% over the same quarter of the previous year, and also, up about 9% over Q3 2012. Meanwhile, average cost-per-click (click related to ads served on Google sites and sites of Google’s Network member) declined nearly 6% in Q4 2012, compared to Q4 2011. Google’s net income in the Q4 2012 was $2.89 billion ($8.62 per share), up from $2.71 billion ($8.22 per share) in the Q4 2011.
One of the most noticeable point for Google Q4 2012 earnings was Motorola generated revenues of $1.51 billion (or 11% of Google’s total consolidated revenues) in Q4 2012. In addition, Motorola Business unit played a significant role in bringing $2.58 billion revenue for the company in the last quarter, ending December 2012.
Google Struggled With Its Mobile Business In Q4 2012
Interestingly, Motorola Mobility, acquired by Google last year, played significant role for Google Q4 2012 earnings. The company pushed out two major Smartphones—Droid RAZR HD and Droid RAZR Maxx HD–last year. At present, both Google and Motorola are working on their ‘X Phone’ project.
Google has always been a money-making-machine. But average cost-per-click (CPC) on desktop decreased by 6% in Q4 2012, compared to the same quarter a year ago. The cost-per-click has been declining because advertisers are less willing to pay for mobile ads. At present, people are more willing to use Google search on their mobile devices, and this is the reason why searches on desktops have continuously been declining.
Now, Google is trying to improve its mobile products’ lineups—such as Nexus and X Phone. Advertisers are currently paying about 50% of amount for an app on mobile devices compare to desktops. As the trend is shifting, Google’s biggest and most lucrative business—desktop search—is gradually losing its momentum. The share of clicks on Google through desktops has dropped to 73% as of December end last year, from 77% in June 2012. On the contrary, the share of clicks on Smartphone and Tablets has surged to 27% from 23% over the last six months, ending December 2012.
As desktop searches are slowing, Google might face challenges from its competitors like Facebook, which has recently unveiled its personalized social search on the site (Graph Search). As the trend is shifting to mobile platform, Google has started focusing on mobile devices. In Q4 2012, Google is expected to ship 1.5 million Nexus Phones and Tablets. Anyway, the company really needs to do something for the monetization of its mobile platform.