Google Inc. posted a 3% increase in first-quarter net income
despite 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 $15.4
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.
Google reported net income of $3.45 billion, or $5.04 per share,
compared with earnings in the year-earlier period of $3.35 billion,
or $4.97 per share. 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.
Write to Rolfe Winkler at rolfe.winkler@wsj.com and John Kell at
john.kell@wsj.com
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