Google Earnings: No Fireworks, But Still Plenty to Like

by Louis Navellier | April 19, 2013 11:13 am

Some of the biggest technology names have reported earnings this week, and the message is clear: Thin corporate spending and a weaker market for PCs and laptops are still plaguing the sector’s heavyweights.

Stock of the Week[1]Intel (NASDAQ:INTC[2]) reported revenues declines and thinning profit margins earlier this week. Microsoft (NASDAQ:MSFT[3]) did a little better than the analysts’ expectations but also fell short on the top line. The results are not horrible given the overall economic backdrop … but they’re not exciting enough to qualify these stocks as buy candidates, either.

Investors had high expectations for Google (NASDAQ:GOOG[4]) ahead of last night’s earnings report, as the tech company has consistently outperformed its peers. And while Google’s profits did beat expectations, the company fell short in revenues as mobile ad sales continue to be a weak spot.

Google reported earnings per share of $11.58 on total revenues of $13.97 billion, vs. $10.08 on revenues of $8.14 billion in the year-ago period. Still, even though revenues fell short of analyst expectations, the company clearly still has impressive sales and earnings momentum.

Also, there were a number of other positives in the report.

Goggle reported that its core business, including advertising revenues, jumped by more than 22% on a year-over-year basis, and paid clicks on advertisers’ sites rose by about 20% in the quarter. However, some analysts expressed concern this morning at the fact that cost per click paid by advertisers fell 4%, marking the fourth straight quarter that metric has declined.

The company has struggled to gain market share in the smartphone business, but there is some evidence that its products are starting to see a stronger reception from consumers. Motorola Mobility’s quarterly loss fell to $179 million — the lowest since Google purchased the phone division. Google has been moving to cut the loss by reducing Motorola’s headcount, and has eliminated its cable TV set-top box product.

On the conference call, CEO Larry Page addressed the focus on non-core initiatives like Google Class and Google X that could provide additional revenue and profit growth for the company in the next year or two. He told investors that incremental improvement was a path to obsolescence, and Google needs to avoid complacency and continue to innovate and improve.

Unlike the fireworks that have surrounded the release of earnings in the past, GOOG shares are up a little more than 2% as investors and traders digest the news.

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