Google’s results disappoint as ad fears weigh

GOOGLE shares dropped as much as five per cent in after hours trading last night, after its first quarter results failed to match analyst expectations.

Revenues for the first quarter of the year were $15.42bn (£9.18bn), about £100m shy of what was expected, but higher than the $12.95bn reported in 2013’s first quarter. Net income increased to $3.45bn from $3.35bn in the same period during 2013.

Although revenues grew, Google said that the average cost-per-click dropped nine per cent from same period last year, with users increasingly moving towards mobile devices where advertising is cheaper.

“As advertisers battle for consumer wallet-share, their mobile strategies will need to become even more sophisticated to ensure they are optimising spend effectively in a world where the cost of mobile advertising is also on the rise, due to its popularity and effectiveness,” said Jon Myers of Marin Software.

UK revenues for Google now make up 10 per cent of the firm’s total, up to $1.58bn. In the same period last year, they made up a slightly larger proportion, at 11 per cent, but a lower nominal figure of $1.39bn.

Despite investors’ disappointment, Google remained upbeat. “We completed another great quarter,” said chief executive Larry Page.

“We got lots of product improvements done, especially on mobile. I’m also excited with progress on our emerging businesses.”

On an earnings call following the announcement, chief financial officer Patrick Pichette said that non-US and non-UK revenues had risen by 25 per cent from the same quarter during the previous year. “I think people tend to forget it but last year we had a very strong first quarter for the UK,” he added. The firm posted a net loss from Motorola Mobile, with $116m of the $1.09bn of losses in the first quarter stemming from the sale of the group to Lenovo in January.