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Google’s earnings fail to meet Wall Street expectations

January 29, 2015

Google missed analyst expectations with its fourth quarter earnings, posting adjusted earnings of $6.88 per share, up from $6.01 per share a year earlier, but missing estimates of $7.11.

The search giant’s revenue figures also disappointed, rising from $16.86 billion for the quarter last year to $18.1 billion this year, but missing the consensus estimate according to Thomson Reuters of $18.46 billion.

The company was quick to point to unfavorable currency exchange conditions as the main reason for not hitting its forecasts. Patrick Pichette, CFO of Google, said in the press release announcing the earnings, that the year on year revenue increase had come “despite strong currency headwinds”.  Google said that the impact of the foreign-exchange situation cost the company around $541 million in revenue.  Pichette also attributed the miss partially due to a problem with Nexus 6 inventory.

The growth in the number of paid clicks recorded in the quarter also missed expectations. Analysts were looking at a 17% increase, yet Google only recorded a bump of 11%. But the average cost per click did fall 3%, which was in line with expectations. Cost per click, which is the piece Google charges for its adverts fell 8% on its own sites.

During the company’s earnings call, Omid Kordestani, Google’s Chief Business Officer, gave some insight into the performance of some of Google’s products. He said YouTube now has 1 billion users, and that mobile revenue from the site rose more than 100% from the previous year. He also said Chromecast had enjoyed a 60% increase in usage since it was launched and Chromebooks were experiencing “strong success” in schools.

Following the earnings announcement, shares in Google dropped nearly 3%, but then recovered to jump almost 2%. Google has underperformed in the stock markets of late. The search giant has dropped around 9% over the past 12 months (prior to the earnings announcement), while the Nasdaq gained 13% over the same period.

Google Inc. – Quarterly EPS | FindTheBest

 

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Filed Under: Consumer, Enterprise, Finance, Mobile, North America

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