recommended reading

Google’s Search Juggernaut Is Showing Some Cracks

Virginia Mayo/AP

The numbers: Google reported first quarter net income of $3.45 billion, slightly up on last year, but well shy of consensus estimates for $4.3 billion, according to FactSet. Revenue was $15.4 billion, up 19% on last year, but only $12.2 billion once commissions paid to partners for traffic were taken out. FactSet expectations were for revenue of $12.4 billion, after the partner commissions. With a miss on both profit and revenue, Google shares have sunk by about 6% in after-hours trade.

Google-quarterly-results-Profit-Gross-revenue_chartbuilder

The takeaway: The average cost per click for advertisements (a measure of how much Google charges advertisers in its auction-based systems) fell by 9% during the quarter, while traffic acquisition costs—the amount it pays to partners for traffic (for example to Apple for default Google searches via the Safari browser on iPhones) rose to $3.23 billion compared to $2.96 billion a year ago. While Google has expanded aggressively in recent years into businesses as diverse as smartphone operating systems and self-driving cars, very profitable search advertising has remained the core of its business. The latest earnings show the prices it can command there dropping and its costs to bring in that search ad revenue rising, which could prove challenging if extended over time.

What’s interesting: “We got lots of product improvements done, especially on mobile,” Google CEO Larry Page said in the earnings press release. Investors are wondering whether Google’s search business will be as much of a juggernaut amid the transition away from PCs to mobile devices. But the only mentions of mobile in the earnings release thereafter were about the accounting treatment for Motorola Mobile, the handset business which Google sold to Lenovo in January.

Reprinted with permission from Quartz. The original story can be found here

Threatwatch Alert

Thousands of cyber attacks occur each day

See the latest threats

JOIN THE DISCUSSION

Close [ x ] More from Nextgov
 
 

Thank you for subscribing to newsletters from Nextgov.com.
We think these reports might interest you:

  • It’s Time for the Federal Government to Embrace Wireless and Mobility

    The United States has turned a corner on the adoption of mobile phones, tablets and other smart devices, outpacing traditional desktop and laptop sales by a wide margin. This issue brief discusses the state of wireless and mobility in federal government and outlines why now is the time to embrace these technologies in government.

    Download
  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

    Download
  • A New Security Architecture for Federal Networks

    Federal government networks are under constant attack, and the number of those attacks is increasing. This issue brief discusses today's threats and a new model for the future.

    Download
  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

    Download
  • Software-Defined Networking

    So many demands are being placed on federal information technology networks, which must handle vast amounts of data, accommodate voice and video, and cope with a multitude of highly connected devices while keeping government information secure from cyber threats. This issue brief discusses the state of SDN in the federal government and the path forward.

    Download
  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

    Download

When you download a report, your information may be shared with the underwriters of that document.