Google still searching for mobile revenues

... but on the bright side, the search giant did turn a profit of $3.4bn, pushing shares up by 4% in after-hours trading.

by Emma Haslett
Last Updated: 07 Feb 2014

Back in 2012, when Google paid $12.5bn (£7.7bn at the time) for Motorola Mobility, the telecoms company’s phone and tablet manufacturing arm, everyone thought it was the beginning of a brave new era for the Silicon Valley giant. Sadly, though, things didn’t go well - and the division went from being a drag on Motorola’s profits to a drag on Google’s profits.

But - caloo, calay! - last night Google posted its first results since it managed to kid - sorry, persuade - Chinese manufacturer Lenovo to buy the company for $2.9bn earlier this week. Investors expressed their delight the only way they know how: shares climbed 4% in (US) after-hours trading, on top of the 2.6% they had gained during the day.

This, despite the fact that Motorola Mobility delivered a $384m operating loss, up from $152m last year.

That rise in share price was, of course, partly to do with the bumper $3.4bn profits the company posted during its fourth quarter ($12.9bn over the full year).

The figures were driven by an increase in the number of people clicking on Google’s ads, which rose by a third, pushing sales up by 22% to $15.7bn in the final quarter - a staggering $55.5bn for the full year. The only fly in the ointment was mobile advertising revenues: because Google can’t charge as much for mobile ads (and the number of clicks from mobiles is increasing), advertisers are now paying 11% less than they were for clicks.

‘Expenses are rising faster than revenue, and for a company their size that’s a problem,’ said analyst Colin Gillis, from BGC partners. ‘The fact that click pricing is declining so much means they still have work to do on mobile.’ Although Google isn’t the only one still trying to figure out what to do about mobile users. Facebook and Twitter have had similar problems.

Meanwhile, at the other end of the west coast, the hunt may be over for the next Microsoft boss. The FT reported this morning that the company is likely to name a successor to Steve Ballmer ‘within days’ - and sources reckon the new man will be Satya Nadella, the boss of Microsoft’s cloud and enterprise division.

It makes sense: the company has been increasingly focusing on its cloud division. And Nadella is popular among Microsoft’s employees. It’ll irritate shareholders, though: many had been pushing for an outsider, who would come in and shake things up after Ballmer’s 14-year tenure. Although arguably Ballmer’s departure alone has been more of a shake-up than the company has seen in years...

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