P&L

Google’s Motorola deal dents the company again

January 30, 2014
January 30, 2014
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The numbers:  The search giant reported net income for the fourth quarter of $3.38 billion, up 17% from the prior year. Sales, excluding the costs of payments to partner sites for traffic, amounted to $13.55 billion, up about 19.5% from the same period last year.

The takeaway: Ad prices are falling, thanks to the lower rates advertisers pay for mobile ads. But Google is making up for the shortfall on volume, because people are clicking on more ads. Cost per click—a metric that measures the price advertisers pay Google each time their ads are clicked on—tumbled roughly 11% versus the fourth quarter of 2012. Paid clicks—which are the number of clicked ads—rose roughly 31% over the fourth quarter of 2012.

What’s interesting: It’s debatable how much of a bath Google took on Motorola Mobility, the troubled cellphone maker that it sold earlier this week to Lenovo for $2.91 billion after buying it in August 2011 for $12.5 billion. Motorola Mobility suffered an operating loss of $384 million in the fourth quarter. There’s an argument that when you factor in the patents Google got to keep, the money it made from selling off a subdivision of Motorola Mobility, some tax adjustments, and other things, Google may not have actually lost money at all. But it’s generally accepted that Motorola Mobility was an albatross Google was lucky to get off its neck.

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