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News : Innovation Last Updated: Jan 23, 2013 - 7:55 AM

Google and IBM report rises in fourth quarter profit
By Finfacts Team
Jan 23, 2013 - 7:51 AM

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Google on Tuesday reported rises in fourth quarter profits as did IBM. The latter posted a fall in revenue.

Google posted a fourth-quarter profit of $2.89bn, or $8.62 a share, up from $2.71bn, or $8.22 a share, a year earlier. Revenue totaled $14.42bn, up 36% from a year ago.

Google said Motorola, excluding its set-top box division, posted a fourth-quarter operating loss of $353m down from $527m loss in the prior period, which included the set-top box unit's results. Late last year, Google announced plans to sell Motorola's set-top box business, which is profitable, to Arris Group in a deal valued at $2.35bn.

The decline in the price per click Google receives on its ads was just 4% adjusted for currency fluctuations, compared with the prior year. In the third quarter, the fall was 8%.

“We ended 2012 with a strong quarter,” said Larry Page, CEO of Google. “Revenues were up 36% year-on-year, and 8% quarter-on-quarter. And we hit $50bn in revenues for the first time last year – not a bad achievement in just a decade and a half. In today’s multi-screen world we face tremendous opportunities as a technology company focused on user benefit. It’s an incredibly exciting time to be at Google.”

Google revenues from outside of the United States totaled $6.9bn, representing 54% of total Google revenues in the fourth quarter of 2012, compared to 53% in the third quarter of 2012 and 53% in the fourth quarter of 2011.

On a worldwide basis, the head count was at 53,861 full-time employees (37,544 in Google and 11,113 in Motorola Mobile and 5,204 in Motorola Home) as of December 31, 2012, compared to 53,546 full-time employees as of September 30, 2012.

As of December 31, 2012, cash, cash equivalents, and marketable securities were $48.1bn. Our effective tax rate was 18% for the fourth quarter of 2012.

Bloomberg says: "Android, which is provided for free to manufacturers, has become a key part of the company’s push into mobile, giving Google access to user data around the world. Android snared 72% of the global smartphone market in the third quarter, according to Gartner Inc.

The company also has a leadership position in search, its core business. Google grabbed 67% of the market in the U.S. in December, according to ComScore Inc. (SCOR) That compares to 16% for Microsoft Corp. (MSFT) and 12% for Yahoo! Inc."

Google's shares rose 5% in after-hours trading.

Results detail

Financial data [pdf]

IBM reported that in the fourth quarter, net income rose 6.3% to $5.83bn, even though overall revenue fell almost 1% to $29.3bn. For this year, IBM said it expects earnings per share of at least $15.53, which would reflect a rise of 8% from full-year 2012 earnings of $14.37 a share.

IBM's revenue, fell for three straight quarters, and decreased 2.3% to $104.5bn in 2012. The firm's shares rose 4.4% in after-hours trading.

"We achieved record profit, earnings per share and free cash flow in 2012.  Our performance in the fourth quarter and for the full year was driven by our strategic growth initiatives -- growth markets, analytics, cloud computing, Smarter Planet solutions -- which support our continued shift to higher-value businesses,” said Ginni Rometty, IBM chairman, president and chief executive officer. ”Looking ahead, we continue to invest to deliver innovations for the enterprise in key areas such as big data, mobile solutions, social business and security, while expanding into new markets and reaching new clients.  We are well on track toward our long-term roadmap for operating EPS of at least $20 in 2015.” 

The Americas’ fourth-quarter revenues were $12.5bn, flat (up 1%, adjusting for currency) from the 2011 period. Revenues from Europe/Middle East/Africa were $9.1bn, down 5% (down 3%, adjusting for currency). Asia-Pacific revenues increased 4% (up 5%, adjusting for currency) to $7.0bn. OEM revenues were $679m, down 5% compared with the 2011 fourth quarter.

Revenues from the company’s growth markets increased 7%. Revenues in the BRIC countries — Brazil, Russia, India and China — increased 11% (up 14%, adjusting for currency).

Bloomberg Businessweek says "IBM’s vaunted services business declined last quarter. So did its hardware business, as sales fell 1% to $5.8bn. Things would have been really bad in hardware-land were it not for the mainframe division. It was the only one of IBM’s four main hardware units that actually increased sales during the fourth quarter. The mainframe—think about that for a minute.

When it comes to software, where IBM receives so much praise, sales rose 3%, to $7.9bn. In the last five years, IBM has bought about 40 software companies, spending $7.4bn alone for Cognos, SPSS, and Kenexa."

IBM 4Q 2012 Earnings News Release including financial tables [pdf]

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