Google’s Q1 Reports 12% Increase; Revenues Disappointing Due To Facebook & YouTube; Tweaks Algorithm

Despite falling short of the analysts’ expectations, Google Inc. (Nasdaq: GOOG) reported on Thursday, April 23 an upsurge by U$0.3 [$1.2] on its per share earnings for the first quarter with U$6.57 a share from the previous year’s U$6.27 . The tech giant posted its first quarterly revenue at U$17.26 billion [$21.23 billion] from last year’s U$15.42 billion.

Facebook’s A Tough Competitor

The culprit for the dismal earnings were Facebook, which emerged as a strong competitor when it comes to mobile advertising, and YouTube’s functionality. Google’s advertising profits were hurting as more consumers prefer to access its Web services through tablets and smartphones, both of which feature lower ad rates.

Due to pressure from Facebook, Google’s algorithm was tweaked on Tuesday to favour websites that look nice on smart phones. Google’s Chief Business Officer Omid Kordestani remarked that “a shift to mobile poses an important opportunity for the company with more than 8 in 10 smartphone users research a product they are about to buy while in stores.” All in all however, its ad sales in Q1 reported U$15.51 billion, up by 11 percent.

More User-Liberty On YouTube’s Ads

According to the executives, the rationale behind the disappointing cost-per-click was YouTube’s TrueView advertisements, which can be skipped by users. But Patrick Pichette, Google’s chief financial officer, denied allegations its growth trend on cost-per-click and clicks was mainly due to “frustrations” in monetising the mobile search.

Strong Currency Exchange

Another reason was attributed to the currency exchange, which in its revenue release, grew by 17 percent from the previous year, but which did not include the net impact of foreign exchange. Taking into consideration the foreign currency, the revenue growth is only 12 percent. Pichette said the strong U.S. dollar resulted in a gross negative currency impact on revenues of U$1.1 billion for the first quarter.

At the closing hours on Thursday and after its revenues were released, Google’s shares of stocks went up by 3.5 percent, albeit, there was sway on the prices after traders absorbed the meaning of the figures and the conference call that followed from the executives. A portion of Google’s revenues was its accumulated cost-per-click, which dropped by 7 percent from previous.

For comments or feedback on the article, contact the writer at kizmet@ymail.com.