Google Q4 revenue misses Wall St target on declining online ad prices

Google's ad revenue has come under pressure as more consumers access its online services on mobile devices

Google Inc’s revenue grew 15 per cent in the fourth quarter but fell short of Wall Street’s target on declining online ad prices and unfavourable foreign exchange rates.

Consolidated revenue in the three months ended December 31 totalled $18.10 billion, compared to $15.71 billion in the year-ago period. Analysts polled by Thomson Reuters I/B/E/S were looking for revenue of $18.46 billion.

Net income rose to $4.76 billion, or $6.91 per share, from $3.38 billion, or $4.95 per share, a year earlier. Adjusted earnings per share of $6.88 missed analysts’ expectations of $7.11.

Shares of Google edged up 0.1 per cent to $510.66 in extended trading after an initial dip on the news.

Google’s advertising revenue has come under pressure as more consumers access its online services on mobile devices such as smartphones and tablets, where ad rates are typically lower.

The growing popularity of mobile devices has made No. 1 social network Facebook Inc a greater threat in the battle for advertisers. Facebook reported on Wednesday that mobile ads on its network doubled year-over-year during the fourth quarter.

Google said on Thursday the average price of its online ads, or “cost per click,” decreased 3 per cent year-over-year in the fourth quarter, while the number of consumer clicks on its ads increased 14 per cent.

Some analysts had hoped for gains in cost-per-click, said BGC Partners analyst Colin Gillis, adding that the company, which gets about half of its revenue overseas, also was hurt by the strong dollar.

“Business is slowing. The core is slowing. And what we’re saying is, it’s going to look on paper even worse as the dollar strengthens. And we are not at that point where mobile monetisation is improving,” he said. “The thesis that the landscape is changing and Google is missing out — I don’t think it will hold to be true, but they haven’t squelched it.”

Chief Financial Officer Patrick Pichette said in a statement that revenue grew “despite strong currency headwinds”.

Search giant to change privacy policy

Search engine Google has agreed to better inform users about how it handles their personal information after an investigation by Britain’s data protection regulator found its privacy policy was too vague.

The Information Commissioner’s Office (ICO) said in a statement on Friday that it required Google to sign a “formal undertaking” that it would make the changes by June 30 and take further steps in the next two years.

As a result, Google will not be fined by the United Kingdom for its actions, in contrast to France and Spain where regulators imposed penalties in addition to asking for changes.

The company welcomed the regulator’s decision, saying it had agreed improvements to its privacy policy.

“We’re pleased that the ICO has decided to close its investigation,” a Google spokesman said.

The tussle between Google and Europe’s data protection regulators began after the company took a new approach in March 2012 to consolidate some 70 existing privacy policies into one.

It also began to pool data collected on individual users across its services, including YouTube, Gmail and its social network Google+, giving users no way to opt out.

Data protection regulators from 28 European countries, known as the Article 29 group, soon found that the approach did not comply with EU rules and gave Google a deadline to change it or face sanctions. That touched off a long period of back and forth between the company and the various national regulators.

Spain fined Google 900,000 euros ($1 million) over the privacy policy, and France 150,000 euros, small penalties relative to Google’s scale. Its annual revenue in 2013 was $55.52 billion.

Other countries are still weighing their responses. In December, Google submitted a “number of improvements” aimed at addressing the European regulators’ concerns, the ICO said.