By Tess Stynes
Google Inc. reported disappointing revenue growth in the holiday
quarter, citing strong currency headwinds and 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 2.8% 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, as 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 said 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.
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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