Google's Q1 earnings disappoint investors

Larry Page

Google, Inc. reported a 19 percent increase in revenue to $15.42 billion for the first quarter but failed to impress investors who continued to fret over weak advertising revenues.

Its net revenue stood at $12.2 billion after subtracting traffic acquisition costs, or the money Google pays to partners that run its ads or direct traffic to its websites. The number of paid clicks (or the clicks on ads paid for by advertisers) improved 26 percent year-on-year. The cost of those clicks, or the amount advertisers paid, fell nine percent.

CEO Larry Page described Q1 as "another great quarter," considering the huge revenue rise.

"We got lots of product improvements done, especially on mobile. I'm also excited with progress on our emerging businesses," he said.

Earnings per share (excluding costs such as those from the sale of its Motorola Mobility division) came to $6.27 per share, which was better than last year but lower than expected.

The results hurt Google's share price. In extended trading shortly after the market closed on Wednesday, Google's shares fell some 6 percent but had recovered 3.75 percent to $556.54.

During this first quarter, Google announced a deal to sell Motorola Mobility to China's Lenovo Group for $2.91 billion. It paid more than $12 billion to buy Motorola Mobility, however. Google reported a net loss of $198 million from discontinued operations, which includes the sale of Motorola Mobility, compared to a loss of $182 million in the first quarter of 2013.

Analysts noted that Google's business remains fundamentally sound. Google, however, hasn't shown when it will deliver on its promise that its mobile ads will eventually be more lucrative than ads shown on desktop computers.

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