Google cites potential of "multiple screens" in lackluster quarter
Google reported a nearly 20% increase in second-quarter revenue after Thursday's market close, and CEO Larry Page credits much of the company's growth to its mobile strategy.
“The shift from one screen to multiple screens and mobility creates tremendous opportunity for Google," Page said in a statement accompanying the Q2 earnings. "With more devices, more information, and more activity online than ever, the potential to improve people’s lives even more is immense.”
Google makes the vast majority of its revenue from online advertising. Its Internet properties (Google, YouTube, etc.) accounted for 68% of Q2 revenues, with partner sites generating another 24%. Its core advertising business, though growing, did not perform as well as expected, particularly on falling cost-per-click rates. This caused the company's stock to drop about 5% after hours.
The company's Motorola Mobility hardware division accounted for $998 million, or only 7% of consolidated revenues in Q2. Still, that's up 18% from a year ago, even though losses also increased. With the expected release in August of the Moto X smartphone, Google’s hardware division should see a healthy increase in revenue in coming quarters.
As for Google's mobile OS, Android, it doesn't really make money, despite capturing nearly 70% of smartphone market share worldwide. But the open-source OS isn't supposed to generate revenue directly. Rather, its very existence is designed to help Google dominate the mobile advertising and handset markets.
"We have activated more than 900 million Android devices worldwide," Page said in a conference call following Thursday's earnings release. "This is amazing given that the first Android phone was launched just five years ago."
Noting that more than 15 million apps have been downloaded from the company's Google Play online apps store, Page said, "We've already paid more money to apps developers this year than in all of 2012."
Page also said the company's Chrome web browser now has more than 750 million users worldwide, and that "Chromebooks are growing fast," though he declined to cite numbers. Recent data from NPD group show that Chromebooks have captured up to 25% of the U.S. market for sub-$300 computers.
Despite the publicity surrounding the beta release of Google Glass in late April, the search giant's wearable computer wasn't mentioned in the earnings press release or the early part of the conference call.
Overall, the search giant recorded $14.11 billion in revenues in the quarter ended June 30, up from $12.21 billion a year ago. Google also reported an increase in profits to $9.71 billion, or $9.54 a share, up from $8.54 billion, or $8.42 a share, in the year-ago quarter.
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