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From left to right - Google's top management, Eric Schmidt, Larry Page and Sergey Brin in a self-driving car, Thursday, Jan 20, 2011, at Google's headquarters, Mountain View California.
Google Inc. on Thursday posted a 36% surge in
third quarter profit and investors sent its shares to record levels in after
hours trading. The search engine giant offset lower advertising rates on mobile
devices by selling a higher volume of ads. The global tax rate fell to 15%.
“Google had another strong quarter with $14.9bn
in revenue and great product progress,” said Larry Page, CEO of Google.
“We are closing in on our goal of a beautiful, simple, and intuitive experience
regardless of your device.”
Google reported consolidated revenues including
Motorola, of $14.89bn for the quarter ended September 30, 2013, a rise of 12%
compared to the third quarter of 2012.
Net revenue, which excludes payments to ad partners, was
$11.92bn, up from $11.33bn. Net income rose to $2.97bn, or $8.75 a share, from
$2.18bn, or $6.53 a share. Excluding the cost of stock options, Google’s
third-quarter profit was $10.74 a share.
Google segment revenues from outside of the
United States totaled $7.67bn, representing 56% of total Google segment
revenues in the third quarter of 2013, compared to 55% in the second quarter of
2013 and 53% in the third quarter of 2012.
Google segment revenues from the United Kingdom totaled $1.39bn, representing
10% of total Google segment revenues in the third quarter of 2013, compared
to 11% in the third quarter of 2012.
The effective tax rate was 15% for the third
quarter of 2013, down from 23% a year before and Patrick Pichette, CFO,
said on a conference call that the rate fell because of the mix of earnings
between its US and overseas subsidiaries, without going into detail.
Paid clicks grew 26% compared with the prior
year, the highest growth rate in a year. However, the average price that
advertisers paid Google when people clicked on ads fell 8%, making it two years
Mobile ads cost half to two-thirds as much as
desktop ads, however, they lead to purchases just a quarter to a third of the
frequency that desktop ads do. Advertisers are searching for the best format
for mobile ads, but it's not easy tracking the effectiveness of on small
The New York Times says Google is still the
leader in online advertising, earning 41% of all digital ad revenue and 53% of
mobile ad revenue, according to eMarketer. Yet the advertising business is
changing under its feet.
As of September 30, 2013, cash, cash equivalents, and marketable securities
were at $56.52bn. On a worldwide basis, the firm employed 46,421 full-time
employees (42,162 in Google and 4,259 in Motorola Mobile) as of September 30,
2013, compared to 44,777 full-time employees (40,178 in Google and 4,599
Motorola Mobile) as of June 30, 2013.
Google's shares rose 8% in after-hours trading on
Thursday to $959.59 and at close of business at 4:00 pm Eastern on Thursday, its
market value was $296bn.
Google set up
well for international recovery: Discussing whether concern for Google's mobile
monetization still exists, with Mark Mahaney of RBC Capital Markets. Mahaney.
"There is a lot of good to come from Google over the next 12 months," he says.
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