Google Profit Misses Street; Stock Down

(RTTNews) - Google Inc (GOOG, GOOGL) Wednesday reported an increase in first-quarter profit, as revenues jumped about 19 percent. Nonetheless, concerns lingered over weak ad prices, bottomline partly hurt by research expense and loss from discontinued operations, with both earnings and revenue falling short of Wall Street estimates.

The announcement disappointed investors, sending Google Class A shares sliding 5 percent in after-hours trade on the Nasdaq.

While Google has managed to post higher profit consistently, investors are concerned over weak ad prices due to the shift in traffic to mobile ads where pricing is lower.

Google said payment from advertisers for the quarter, also known as average cost-per-click, slid 9 percent from last year, although aggregate paid clicks climbed 26 percent.

Google CEO Larry Page said that overall prospects appear buoyant, with the company focused on product developments and hopeful of progress in emerging businesses.

Mountain View, California-based Google posted first-quarter net income of $3.45 billion or $5.04 per share, compared with $3.35 billion or $4.97 per share last year.

Results for the recent quarter included a loss from discontinued operations of $198 million, partly related to its now divested Motorola Mobility unit.

Excluding items, adjusted earnings for the quarter were $4.3 billion or $6.27 per share, compared with $4.04 billion or $6.00 per share a year ago.

On average, 37 analysts polled by Thomson Reuters expected earnings of $ 6.40 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the first quarter grew 19 percent to $15.42 billion from $12.95 billion in the prior year. Twenty-nine analysts had a consensus revenue estimate of $15.52 billion for the quarter.

Traffic acquisition costs (TAC) - the part of revenue Google shares with advertising partners - were $3.23 billion in the quarter, compared with $2.96 billion last year.

Excluding TAC, revenues for the quarter were $12.19 billion, compared with $9.99 billion a year ago.

The company expended $2.1 billion on research, up from $1.6 billion last year.

In January, Google agreed to sell Motorola Mobility to Chinese hardware company Lenovo for $2.9 billion in order to focus on Android. The move came just within two years after Google acquired the handset division from Motorola for $12.5 billion.

The same month, Google agreed to acquire home automation start-up Nest Labs for $3.2 billion. Based in Palo Alto, California, Nest Labs makes sensor-driven, Wi-Fi-enabled, self-learning, programmable thermostats and smoke detectors.

Recently Google acquired solar powered drone maker Titan Aerospace, a startup that makes high-altitude unmanned aircraft.

Meanwhile, on Tuesday, Yahoo Inc (YHOO) reported a 20 percent decline in quarterly profit, hurt by increased operating expenses, even as its ad business marginally rebounded for the first time in about three years and search revenue maintained the momentum. Yahoo's results topped Wall Street estimates and its stock gained 8 percent in after-hours trade.

Google had split its stock into two classes: the traditional voting Class A shares with the ticker GOOGL, and new non-voting Class C shares with the ticker GOOG.

On Wednesday, GOOGL closed Wednesday at $563.90, up $15.20 or 2.77%, on a volume of 3.1 million shares on the Nasdaq. In after hours, the stock dropped $29.40 or 5.21% at $534.50.