Google first-quarter revenue misses Wall Street targets

1 of 2. A Google logo is reflected on the screen of a Samsung Galaxy S4 smartphone in this file photo illustration taken in Prague January 31, 2014.

Credit: Reuters/David W Cerny/Files

SAN FRANCISCO (Reuters) - Google Inc's first-quarter revenue fell short of Wall Street targets and margins narrowed as the price of its ads continued to decline, pushing its shares sharply lower.

Shares of Google were down 5.7 percent at $525 in after-hours trading on Wednesday.

The number of "paid clicks" by consumers on Google's ads increased by 26 percent in the first quarter, disappointing some analysts that had hoped for stronger volume growth. And the average "cost per click" declined 9 percent, extending a downward trend as mobile advertising, typically cheaper than traditional online ads, make up a bigger slice of its business.

"It's an average quarter from a great company," said BGC Partners analyst Colin Gillis. "It's the same old story. Paid clicks were a little lighter than people might have hoped, CPC declines were a little higher than people would have liked, expenses continued to rise."

Operating income slipped to 32 percent of revenue on an adjusted basis, from 34 percent in the year-ago period.

Google's core Internet business revenue climbed 19 percent to $15.42 billion in the first quarter from $12.95 billion in the year-ago period.

It posted $3.45 billion in net income, or $5.04 per share, in the three months ended March 31, compared to $3.35 billion, or $4.97 per share, in the year-ago period. Excluding certain items, Google earned $6.27 per share.

Google reported a $198 million net loss from "discontinued operations," which includes the Motorola smartphone business. Google announced plans in January to sell the money-losing business to China's Lenovo Group for $2.91 billion.

(Reporting by Alexei Oreskovic; Editing by Richard Chang)

Comments (3)

Why isn’t Google or IBM announcing an acquisition or share buy back with their lack luster earnings? With their high P/E they must have know their stock would get hammered. Both companies are really cash rich since they don’t pay much taxes and their money is protected in offshore accounts. I think we’ll hear something in the coming weeks. Go capitalism!

Very interesting how a stock that has a P/E of 30 that misses Wall Street will behave over the next few days. Did IMB do any better?

So let me see if I understand this.

They made more money than last quarter but still missed their “target” and that’s disappointing.

They keep setting the Par higher …greed knows no boundaries.