SAN FRANCISCO (MarketWatch) — Google Inc. showed improvements in its core advertising business in the second quarter, helping offset losses incurred by its newly acquired Motorola Mobility business, according to results released late Thursday.
Google (US:GOOG) shares rose 3% in after-hours trading on Thursday afternoon on the results, and maintained that gain following a conference call hosted by company executives. The stock had picked up more than 2% in regular trades earlier in the day to close at $593.06, but remains down more than 8% for the year.
Investors had been worried about the outlook for the company’s advertising business after some worrisome metrics reported in the last quarterly results — along with the global economic slump.
“Quite simply, it was not as bad as feared,” said Colin Sebastian of Robert W. Baird in an interview, noting “a lot of concern” ahead of the report. “They were a little weak on the top line, which was not a surprise given the macro environment.”
For the period ended June 30, Google reported net income of $2.79 billion, or $8.42 per share, compared to net income of $2.51 billion, or $7.68 per share, for the same period last year.
Earnings on an adjusted basis came in at $3.35 billion, or $10.12 per share, for the recent period.
Net revenue — excluding the contribution of Motorola Mobility — was $8.36 billion.
Analysts were expecting earnings of $10.04 per share on core revenue of $8.41 billion, according to consensus forecasts from Thomson Reuters.
Mark Mahaney of Citigroup described the company’s results as “reasonably good” in an e-mail to clients, noting that the stock’s valuation remains “very reasonable.”
Paid clicks grew 42% for the period, higher than the 36% growth that analysts were expecting. Cost-per-click, or CPCs, fell by 16%, indicating weaker pricing during the period, which Mahaney believes is due to the impact of changes in ad quality as well as growth in mobile device search queries.
The newly acquired Motorola Mobility unit had total revenue of $1.25 billion for the second quarter, with mobile device revenue of $843 million. Google noted that this was a “stub quarter” for Motorola, in that the results did not include a full operating period, given that the acquisition did not close until May 22.
The Motorola wireless device business generated an operating loss of $192 million for the second quarter.
Google CEO Larry Page did not participate in the earnings call Thursday afternoon. The company announced last month that he had stepped back from speaking engagements, due to losing his voice.
Asked by one analyst during the call about Page’s health, Google’s chief business officer Nikesh Arora said Page “continues to run the company” and is “involved in all the strategic business decisions,” but gave no further details. Page also did not address the company’s annual shareholders’ meeting or its I/O developers conference last month.