Google’s share price has broken through the $1000 mark today- the day after it reported an increase in it’s third quarter earnings.
The numbers released yesterday impressed investors who had been fretting about a downturn in Google’s ad prices that began two years ago. Those concerns evaporated, at least temporarily, with a third quarter performance that exceeded the analyst projections steering Wall Street.
Google’s ad prices are still sagging as marketers pay less for commercial space on mobile devices, but the number of revenue generating clicks on those ads is rising at a much faster rate.
The equation resulted in a 36 percent increase in Google’s earnings for the three months ending in September.
The robust share rally represents an abrupt about face. As the overall stock market rose, Google’s shares had slipped slightly during the past three months. The reason: Google’s previous quarterly report in mid-July revealed the deterioration in the company’s ad prices was getting worse.
Google’s average ad price has now declined from the prior year in each of the last eight quarters, primarily because advertisers aren’t yet paying as much for mobile ads because the screens on smartphones and tablet computers are smaller than those on laptop and desktop computers.
As more people rely on mobile devices to connect to Google’s search engine and other services, it’s driving down the company’s average ad price, or “cost per click.”
In Google’s latest quarter, that measure fell 8 percent from last year- which was worse than the 6 percent drop in the previous quarter.
But the number of so-called “paid clicks” on Google’s ads helped offset the lower prices in the third quarter. The clicking volume increased 26 percent from last year, an indication that Google’s data analysis is doing a good job matching ads with the interests of its services’ users.
Google Inc. earned nearly £1.87 billion, or £5.46 per share, during the three months ending in September. That compared to income of £1.37 billion, or £4.08 per share, at the same time last year.
Revenue for the third quarter rose 12 percent from last year to £9.32 billion. After subtracting commissions paid to Google’s ad partners, Google’s revenue stood at £7.43 billion.
In a mild surprise, Google CEO Larry Page disclosed yesterday that he doesn’t plan to regularly participate in the company’s quarterly earnings calls with analysts in the future.
Mr Page, 40, missed an earnings call last year because of an ailment on his vocal chords that made it difficult for him to talk. Although his voice remains raspy, Page didn’t mention that as a reason for skipping the calls. He said he wants to devote more time to running the company and helping Google’s engineers build great products.
Google’s rise and rise is based upon the Golden Egg that is it’s pay per click gem Adwords. We did some research a few years ago and for every £100 you donate to it, £85 used to pay for the bubbly at the shareholders’ AGM.