RKG DMR Data in Wall Street Journal Article on Google Earnings
From the Wall Street Journal:
Google Shares Slide After Disappointing Results
Smaller-Than-Seen Earnings Increase Comes as Company Deals With Less Money Per Ad Click
Google Inc. GOOGL -4.98% posted a 3.2% increase in first-quarter net income amid a continuing decline in how much advertisers pay per click, as users shift to smartphones and tablets.
The Internet-search giant said revenue rose 19% to $15.42 billion. Analysts had projected revenue of $15.54 billion on that basis, according to Thomson Reuters.
Investors were disappointed by Google’s financial figures, sending its shares down 5% in after-hours trading. The stock finished 4 p.m. trading at $563.90, barely higher than the price at the beginning of 2014.
Google reported net income of $3.45 billion, or $5.04 per share, up from earnings in the year-earlier period of $3.35 billion, or $4.97 per share. The per-share figures are adjusted for the two-for-one stock split.
Excluding stock-based compensation and other items, Google said earnings were $6.27 per share, below the average analyst estimate of $6.41 a share, according to Thomson Reuters.
Advertising revenue was driven by more clicks on advertiser links next to Google’s search results, which increased 26% from the prior year. At the same time, the amount Google gets paid per click fell 9% compared with the prior year, continuing a trend as a higher percentage of searches occur on smartphones, where Google’s clicks are less valuable.
The smaller screens and limited bandwidth of smartphones make them a less-appealing tool than desktop computers for consumers looking to buy products or services online. Marketers that work with digital ad firm Rimm Kaufman Group paid about 60% less for smartphone clicks than desktop clicks in the first quarter in order to generate an equivalent payback.
Update: WSJ article extended here http://on.wsj.com/1qPjiog and in the print edition (4-17-2014)