By Tess Stynes
Google Inc. reported disappointing revenue growth in the holiday
quarter amid further indications of slowing growth in its maturing
search-advertising business.
Shares of Google, which have declined 7% over the past three
months, fell 1% in recent after-hours trading.
Fear of slowing revenue growth in Google's core search
advertising business has been a key reason why the company's shares
have fallen in recent months. Google has two faster-growing
businesses in YouTube and the Google Play Store, but those units
remain small compared with search.
The amount Google receives per ad click is decreasing as the
number of clicks increases, in part because a bigger portion of
total clicks is coming from smartphones, deemed less valuable by
advertisers.
In the fourth quarter, clicks on advertiser links next to
Google's search results increased 14% from a year earlier, but the
amount Google got paid per click fell 3% from a year earlier.
For the latest period, Google's revenue rose to $18.1 billion
from $15.7 billion, but fell below the $18.46 billion recently
expected by analysts polled by Thomson Reuters. The company noted
that "strong currency headwinds" weighed on the quarter, echoing
other multinational companies.
Overall, Google reported a profit of $4.76 billion, or $6.91 a
share, up from $3.38 billion, or $4.95 a share, a year earlier.
Excluding stock-based compensation, discontinued operations and
other items, per-share earnings rose to $6.88 from $6.70.
Analysts had expected earnings of $7.11 a share.
Google has been spending heavily as it invests in new businesses
to maintain growth. During the latest period, operating expenses
other than the cost of revenue were $6.78 billion in the latest
quarter, or 37% of revenue, up from $5.03 billion, or 32% of
revenues, in the year-ago quarter.
The company's research-and-development expenses rose 46% to
$2.81 billion.
Write to Tess Stynes at tess.stynes@wsj.com
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