December 3, 2023

Revenue Rises at Google but Profit Misses Forecasts

SAN FRANCISCO— Google got off to a mixed start under its new chief executive, co-founder Larry Page, as first-quarter revenue increased 27 percent while profit fell short of analyst expectations.

Google reported that net income in the quarter rose 17 percent to $2.3 billion, or $7.04 cents a share, from $1.96 billion, or $6.06 a share in the year-ago quarter.

The company said revenue climbed to $8.58 billion from $6.77 billion.

Google’s adjusted income of $8.08 was just below the expectations of Wall Street analysts. They had forecast $8.11 cents a share on that basis, according to a survey of analysts by Thomson Reuters.

Google’s shares barely rose in regular trading to $578.12, and dropped 4.8 percent to $548.79 in after-hours trading.

Revenue excluding payments to partner Web sites, a measure commonly used by analysts following the company, was $6.54 billion, Google said. Analysts had expected $6.32 billion in revenue on that basis.

“We had a great quarter with 27 percent year-over-year revenue growth,” said Patrick Pichette, Google’s chief financial officer, said in a press release. “These results demonstrate the value of search and search ads to our users and customers, as well as the extraordinary potential of areas like display and mobile. It’s clear that our past investments have been crucial to our success today — which is why we continue to invest for the long term.”

Indeed, the company, based in Mountain View, Calif., said that paid clicks, the number of time users clicked on ads on Google and those of its partner sites, increased 18 percent in the first quarter from the same period a year earlier. The price advertisers paid for Google’s ads grew 8 percent.

Revenue from international operations was $4.57 billion, or 53 percent of all the company’s revenue during the quarter.

Mr. Page took over as chief executive last week and immediately started putting his stamp on the company, which he co-founded in 1998 with Sergey Brin. During his brief tenure, he has already reorganized Google’s management and revamped its employee bonus program. Mr. Page had served as chief executive until 2001, when the company hired Eric E. Schmidt as its leader.

Mr. Page’s goal is to increase innovation and speed decision making. Facebook, with its rapid rise in social networking, is posing a serious challenge to Google, which has so far failed to make much progress in social networking despite multiple efforts.

Google’s first-quarter earnings are the first reported with Mr. Page at the helm. However, they reflect the company’s performance for the first three months of the year, when Mr. Schmidt, was still in charge. Mr. Schmidt now serves as the company’s chairman.

Since Google announced in January that Mr. Page would be chief executive, the company’s shares have fallen 8 percent, signaling nervousness among investors about his leadership.

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