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Google reports profits up an impressive 11 per cent

by Alistair Lowe on 20 July 2012, 10:44

Tags: Google (NASDAQ:GOOG)

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Whilst Microsoft's playing the roll of underdog - sort of - clearly poised to fight back with intense vigour over the next few quarters, Google has reported a strong, steady growth for this quarter, resulting in profits which were up 11 per cent over this time last year and, a revenue that has risen by 35 per cent, thanks to the acquisition of Motorola.

To pair some real figures with these percentages, profits for the quarter were £1.78 billion, up against £1.60 billion this time last year. Likewise, revenue is now at £7.77 billion up from £5.76 billion. This of course means that whilst more money is passing through Google, an increasing amount slipped through the firm's fingers as profit margins fell.

We've witnessed from Nokia just what a slippery slope there is for companies with a large revenue and small profit margins and, how quickly fortunes can turn, however, for Google, a large part of these quarterly figures factored in the acquisition costs of Motorola, an invaluable patent resource, which, as a company is still undergoing heavy restructuring and, quite reasonably, contributed a loss to Google's overall figures. With a revenue of £795 million and room for growth, there's plenty of wiggle room for Google to return Motorola to a profitable state.

In Google's home territory, advertisement, the firm has faired well, with increasing revenue of around 21 per cent. Whilst the cost-per-click for advertisements has dropped by 16 per cent, the total number of paid clicks has increased 42 per cent, leading to strong figures. It's interesting to note that growth in this area has been exclusively within the US, with international revenue remaining completely static at 54 per cent of the firm's total, with 11 per cent of Google's revenue coming from the UK - £751 million.

With Google's core business relying heavily on online advertisement, the firm is always in a theoretically rocky state where, all it would take was a loss of mobile market share or a shift to a new search engine and the firm would suffer a serious blow, however, unlike companies that specialise in hardware, with large operating fees, Google's well equipped to ride-out any bumps in the market and maintain its profit margins.

There's currently no immediate signs of a stop to Google's growth, with Android device sales and advertisement revenue continually on the up, however, with Microsoft gearing to launch its '8' series of products, it'll perhaps be worth checking back in over the next few quarters to see how the firm is fairing.

For a complete quarterly breakdown, head on over to the following link: http://investor.google.com/earnings/2012/Q2_google_earnings.html



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