Google Inc. posted fourth-quarter sales that topped estimates as retailers spent more on advertising during the holidays, making up for lower ad prices.
Revenue, excluding sales passed on to partners, rose 11 percent to $13.6 billion, while profit excluding certain items was $12.01 a share, the company said in a statement last week.
Chief Executive Officer Larry Page is fine-tuning Google’s mobile strategy. It’s exiting Smartphone manufacturing and selling its Motorola handset unit — which had an operating loss of $384 million – to Lenovo Group for $2.91 billion. While ads on phones make less money than on desktop computers, Google was able to generate income from retailers targeting online shoppers, who boosted e-commerce sales 15 percent to $61.8 billion during the holiday period, according to EMarketer Inc.
“The holiday shopping season online was strong to very strong,” said Scott Kessler, an analyst at S&P Capital IQ Inc. in New York who has a hold rating on the stock. “Google more than likely benefited from that.”
Within Google’s core business, prices for ads fell 11 percent in the fourth quarter, compared with a decline of 8 percent in the previous period, At the same time, the volume of clicks on ads jumped 31 percent compared with a gain of 26 percent in the earlier period.
“The fact that click pricing is declining so much means they still have work to do on mobile,” said Colin Gillis, an analyst at BGC Partners LP in New York who rates the stock a hold.
Google has been upgrading its sales features.
Last year, it introduced an advertising service called enhanced campaigns, encouraging marketers to funnel more of their spending to wireless devices. The company also has been pushing retail customers to spend more on producing listing ads, which enable them to use more information in promotions, including pictures.
