Google Inc (NASDAQ:GOOG) reported earnings of $8.62 per share on revenue of $14.42 for the fourth quarter of 2012 after Tuesday’s market close.
The figures compare with earnings per share of $9.50 in the last three months of 2011, on revenues of $10.6 billion.
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Google investors have seen the firm’s share price rollercoaster in the last twelve months. the firm’s shares rose to a high of over $770 last October, before crashing after the company disappointed on its third quarter 2012 earnings report. Those earnings were released early by accident, reinforcing the panic felt on Wall Street after the miss.
Analysts expected the firm to record earnings of $10.56 per share, for the last three months of the year, on revenues of $15.4 billion. the firm’s core advertising business has performed well in 2012, but the growth in that sector has been softened by the slower than expected growth in the firm’s Motorola Mobility segment.
Last week Google Inc (NASDAQ:GOOG) informed analysts that they had made a mistake in estimating the company’s earnings for the fourth quarter. According to the firm, analysts had failed to factor in the upcoming sale of the set-top box branch of Motorola’s business when estimating the firm’s earnings. Google said that analysts’ estimates of the company’s EPS was roughly 40 cents too high, and revenue estimates overshot accurate estimates by around $1 billion.
During the first weeks of 2013, the company’s shares have traded relatively flat, and managed to trade in a range between $740, and a low of just under $700. Google Inc.’s (NASDAQ:GOOG) investors are hoping the firm can change its focus in 2013 to better reflect the changes in how people use the web.
Those changes are widely understood, and much of their changes in the company’s revenue structure were anticipated before this afternoon’s earnings release. Desktop web search revenue has fallen, reflecting the growth of mobile usage cannibalizing some of the firm’s core revenue streams.
Google Inc (NASDAQ:GOOG) has responded to the changes in the market by widening its revenue base. The company moved into hardware in a much more purposeful manner this year, and continues to grow its mobile sourced revenues. Investors are hoping to see the business continue to adapt to the changes in the market in the coming year.
Some analysts expect that Google’s ability to adapt will protect them from the changes in the market; this flexibility also has the effect of compressing the company’s margins. Margins from desktop search are higher than those in almost any other part of the company’s business, display ads don’t offer the same margins, and hardware is an even less profitable business.
Google Inc (NASDAQ:GOOG) is a strong company fundamentally, but it operates in a fast paced environment. There are no guarantees in untested waters, and investors are beginning to understand that the tech market is still relatively unstable. Google is, however, one of the companies in the industry with the strongest track record, making it one of the better bets going forward.