Google share price up, reports slower revenue growth on stronger dollar

Google Inc announced on Thursday a slower-than-expected revenue growth due to the stronger dollar and falling prices on online advertisement.

The Mountain View, California-based company reported revenue of $18.1 billion for the three months ended December 31, up from the $15.71 billion reported in the last quarter of 2013. However, analysts surveyed by Thomson Reuters had projected revenue of $18.46 billion.

Net income for the quarter came in at $4.76 billion, or $6.91 per share, up from $3.38 billion, or $4.95 per share, a year ago. Excluding some items, per-share earnings stood at $6.88, also below expectations of $7.11. The sale of Googles struggling Motorola business to Lenovo contributed $740 million to net income.

According to Googles Chief Financial Officer Patrick Pichette, the stronger dollar hurt results by at least $400 million and said if the rise of the US currency was out of the equation, revenue would have jumped around 20%.

Typically a stronger domestic currency dents profits of companies who generate revenue outside of their home market. Googles international revenue accounted for 56% of the overall figure in the fourth quarter.

The technology giants revenue has been pressured by the increasing number of mobile users as well as the decrease of people who use its search engine on a personal computer. Typically, websites optimized for mobile devices, like smartphones and tablets, have fewer ad rates compared to internet pages intended for laptops or PCs.

Additionally, the average cost-per-click, or the amount that is paid to Google when a person clicks an advertisement run by the company, declined 3% year-on-year. The figure fell with the same percentage during the fourth quarter of 2013 as well, analysts at Wall Street also expected a 3% drop.

Googles own websites, including YouTube, generated revenue of $12.43 billion during the quarter, representing 69% of the total, also up 18% compared to 2013.

Paid clicks increased 14% versus the same period a year earlier, down from expectations of 15% increase.

During the quarter Google increased its workforce by slightly more than 2 000 to 53 600 full-time employees.

Meanwhile, Google has been ramping up expenses, research and development costs jumped 45% to $2.8 billion and capital expenditures reached a company record of $3.55 billion, the majority of which spent on purchasing real estate, production equipment, and data center construction. Google also intents to “continue to make significant capital expenditures.”

Google Inc gained 0.13% on Thursday and closed at $510.66. The company is valued at $347.29 billion.

According to CNN Money, The 41 analysts offering 12-month price forecasts for Google have a median target of $630.00, with a high estimate of $750.00 and a low estimate of $530.00. The median estimate represents a 23.37% increase from the last close price.