Forget the Flub: Google’s Larry Page Wants to Talk Mobile

CEO calls his mobile strategy the 'new reality'

By Tom Taulli, InvestorPlace Writer & IPO Playbook Editor

Well, that was a crazy day.

Google (NASDAQ:GOOG) on Thursday saw its stock get pummeled after its financial printer, R.R. Donnelley (NASDAQ:RRD), filed the Internet search giant’s 8-K early this afternoon — hours before the company was actually supposed to report.

While that was jarring, investors were more concerned about Google’s performance in Q3, sending GOOG shares down 9% before trading was temporarily halted. Shares finished down 8%.

On the earnings conference call, CEO Larry Page apologized for the premature disclosure, but he then transitioned quickly  to talk about his vision for his mobile strategy, which he dubbed a “new reality.”

No doubt, Page was hugely bullish. He thinks mobile monetization ultimately will be higher than the desktop, and he expects innovation in ad formats and strategies. He said the annual run-rate for mobile is currently more than $8 billion, hugely up from $2.5 billion a year ago. Also promising is the sheer growing opportunities — there are more than 500 million Android units in use across the world, and devices using the OS see 1.3 million activations per day.

Still, investors were far from convinced; GOOG shares were up less than 1% in early after-hours trading.

A big issue for investors was Google’s 15% year-over-year drop in “cost per clicks,” which could be a sign that the transition to mobile — even if it eventually yields the lofty results that Page expects — likely will mean ongoing light revenues in the short-term. If that problem sounds familiar, it’s because it’s the same issue that has dogged Facebook (NASDAQ:FB) through and before its publicly traded life.

Now, Google’s prospects still look bright. The company remains the dominant player in the search business, with market share of 60%, as well as in advertising services (DoubleClick) and video (YouTube). What’s more, Google is making investments in local commerce to take on Groupon (NASDAQ:GRPN), such as its acquisitions of travel guide Frommer’s and restaurant rater Zagat.

But mobile is the holy grail — that’s clear by Page’s laser focus. That’s because monetization will be about more than just advertising, but could include other sources of revenue such as games, apps and entertainment content.

It might take some time, but if Google can solve mobile’s problems, the long-term growth potential should be substantial.

Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.”  Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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