Google profits break records as ads recover

GOOGLE saw record profits in the final quarter of last year, as its business grew internationally and average advertising rates stabilised.

The technology giant beat expectations to report revenues of $14.4bn (£9bn) for the period, a 36 per cent year-on-year increase. Profits rose to $2.89bn, relieving investors who were spooked three months earlier when Google posted a sharp decline in earnings for the previous quarter.

Although profits were up only slightly, the rise was impressive considering they included the lossmaking Motorola business, which Google bought last year for $12.5bn.

Average cost-per-click, the amount that Google charges an advertiser when someone using its search engine clicks on an advert, declined six per cent year-on-year.

This fall, attributed to the lower rates charged in emerging markets and on mobile phones, was not as bad as feared, however, and the average cost-per-click actually improved two per cent on the previous quarter.

“Business looked really strong, especially from a profitability perspective,” said Sameet Sinha, an analyst at Los Angeles investment bank B Riley Caris.

The results meant that Google’s revenues for 2012 were above $50bn for the first time. “Not a bad achievement in just a decade and a half [since Google’s birth],” Larry Page, the company’s chief executive said.

Shares in Google rose around five per cent in after-hours trading following the announcement. Revenues from the UK amounted to $1.3bn, roughly 10 per cent of total sales. This came despite data from Experian claiming that Google’s market share of search has dropped to 88 per cent, its lowest position for five years.