Google Delivers Big For Investors

Google (NASDAQ:GOOG) closed Tuesday’s regular session off by $1.64, or about 0.2 percent, ahead of its fourth-quarter earnings. Analysts were looking for earnings of $10.52 per share on $12.36 billion in revenue. What they got was better, and shares shot up as much as 4.7 percent in after-hours trading.

Google reported a 36.26 percent year-over-year increase in revenue to $14.42 billion and a 6.88 percent year-over-year increase in net income to $2.89 billion, or $10.65 per share. The beat on both fronts was foreshadowed by a blog post from Google vice president, treasurer, and chief accountant Brent Callinicos, who warned that analyst expectations may be artificially high. Callinicos was concerned that analysts would not have taken into consideration the fact that Google was selling Motorola Home, the division of Motorola that makes TV set-top boxes.

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Heading into the release, Google had an earnings beat rate of 79 percent and an average 1.3 percent gain on earnings day.

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 10,580 10,640 12,210 14,100 14,420
Diluted EPS ($) 8.22 8.75 8.42 6.53 8.62

But more interesting were Google’s other operational metrics. Paid clicks increased 24 percent year-over-year and 9 percent month-to-month. This came after a 33 percent gain in paid clicks for the third quarter.

However, the cost per click fell 6 percent, which comes after a 15 percent drop in the third quarter. Traffic acquisition costs, the portion of revenue Google shares with its partners, increased to 25 percent of ad revenues, a 1-point increase from a year ago.

Google’s overall success with ad revenue has been plagued by mobile, which attracts as much as 50-percent fewer ad dollars. Facebook (NASDAQ:FB) may be leading the way in mobile monetization, jeopardizing a first-mover benefit that Google would have coveted. Losing the race would not only mean a lag in capturing new ad dollars for Google, it would prove a blow to the company’s image as a company expected to out-innovate the social network.

Apple (NASDAQ:AAPL) will report its highly anticipated fourth-quarter results after the bell on Wednesday. The iPhone maker’s stock has been under considerable distress over the past few months on investor concerns about its long-term growth prospects. Investors are looking for a beat to boost market confidence in the stock, especially as Google trims the fat on its Motorola unit.

Don’t Miss: Google Warns Investors Before Earnings Release.