Big spender
Internet giant Google announced its latest quarterly earnings late yesterday. Google's shares were down over five percent in after-hours trading after it revealed earnings per share of $8.08 on net revenues (excluding traffic acquisition costs) of $6.54 billion ($8.58 gross). This was slightly below consensus analyst expectations of $8.14 and $6.3 billion, respectively.
The main reason for this slight miss appeared to be higher than expected expenditure. In the Q&A Google was quizzed on this and revealed a big part of the reason was recruitment (almost 2,000 employees added in that quarter alone to 26,316), retention (everyone got a ten percent pay rise) and capex on datacentres. There was also a fair bit spent on marketing the Chrome browser.
"We had a great quarter with 27% year-over-year revenue growth," said Patrick Pichette, CFO of Google. "These results demonstrate the value of search and search ads to our users and customers, as well as the extraordinary potential of areas like display and mobile. It's clear that our past investments have been crucial to our success today--which is why we continue to invest for the long term."
There were some products nuggets, especially around Android. It was revealed that Google is now activating 350,000 Android devices per day, but any questions around tablets were fudged with standard stuff about how excited they are about its potential. From that we infer initial figures are nothing to crow about, as expected.
In other news, the IAB has revealed that the cost of advertising on Facebook - Google's increasingly prominent display advertising rival - increased by 40 percent, as demand for its pay-per-click ads shot up. This is also positioned as evidence of an overall economic recovery, but will add to the competitive pressure Google feels from Facebook.
