Google profits rises on Christmas ad boost
Google, owner of the world's largest search engine, reported higher profit as advertisers boosted spending to reach consumers during the holiday shopping season.
Fourth-quarter profit, excluding certain items, rose to $US10.65 a share, Google said in a statement.
Google gained from growing demand for its advertising as retailers poured money into online advertising and extended the season for buying gifts. Total spending in the US e-commerce industry jumped 14 per cent during the last two months of 2012 as retailers began promoting Web-only deals earlier, according to ComScore Inc.
"The holiday shopping season was longer and stronger than most expected," said Scott Kessler, analyst at S&P Capital IQ, said in an interview. "Google benefited because retailers frequently make use of online advertising as a way to communicate with existing and would-be customers."
Shares of Mountain View, California-based Google rose in late trading, after earlier slipping less than 1 per cent to $US702.87 at the close in New York.
The average amount advertisers paid each time a user clicks on a promotion decreased 6 per cent, following a 15 per cent decline in the previous period. The number of overall clicks advanced 24 per cent, after a 33 per cent decline in the third quarter.
Google acquired the unit as part of its $US12.4 billion purchase of smartphone-maker Motorola Mobility Holdings last year. In August, Google said it would cut 4,000 Motorola jobs and close about a third of its 90 facilities. Arris Group Inc. agreed to buy the Motorola Home unit for $US2.35 billion in December.
With the cutbacks, Motorola now can focus on its handset business, which uses Google's Android operating system to run the smartphones. Android, which is provided for free to manufacturers, has become a key part of the company's push into mobile, giving Google access to user data around the world. Android snared 72 per cent of the global smartphone market in the third quarter, according to Gartner Inc.
The company also has built a large leadership position in search, its core business. Google grabbed 67 per cent of the market in the US in December, according to ComScore Inc. That compares to 16 per cent for Microsoft Corp. and 12 per cent for Yahoo! Inc.
Despite its huge lead, Google could come under pressure from Facebook Inc., owner of the world's largest social- networking service. Last week, Facebook announced a new search tool that lets users discover people, photos, places and interests on the service.
When fully rolled out, the feature could give Web users an incentive to use Google less. Facebook also has a partnership with Microsoft's Bing search engine, which will deliver additional results from the Web when Graph Search doesn't deliver clear answers to queries.