Saturday, January 31, 2015

Google 4th Quarter Earnings

On January 29th, Google reported earnings at $6.88 a share missing consensus' figure of $7.12. 4th quarter revenues were reported at $18.10 billion reflected a 15% increase in comparison with the previous year's 4th quarter performance. Net income amounted to $4.76 billion and is 24% of revenues, Q4 of 2013 recorded net income at 28% of revenues and the decrease in the net income margin is attributable to an increase in operating expenses.

Google's performance for the year has been sub-par in regards to the growth investors expect from the tech giant. The stock's value has been trending downward for the year due to negative investor sentiment caused by Google's active expansion into other business markets. The 10% drop over the year could be caused by investors believing that Google is losing some focus as to what exactly drives its revenue which is advertisements.With cost-per-click down 3% over the quarter, Google needs to act on improving the core driver of revenues. Google has also had recent turmoil in Europe because of its dominance of internet traffic. The EU is seeking to limit Google's presence in Europe which could impact international revenues in the future.

Looking forward, Google is planning on increasing CPC activity by focusing on CPC interactions on mobile devices. Its doing so by re-innovating its programmatic platform which matches ads with user content. A motion that will most likely alleviate investors who wish to see Google focus on ad revenue. Google is also seeking to break into the cloud market, although it entered the market space late there is still tremendous room for growth for Google in this industry. With Google's dependable trend for innovation and over $60 billion in cash and equivalents on its balance sheet, there is reason to be hopeful that the stock will climb in value in 2015.

No comments: