Nexus 6 Supply Constraints Hurt Google Inc Revenue: Pichette

Nexus 6 Supply Constraints Hurt Google Inc Revenue: Pichette
Photo by Domenic K.

Nexus 6 has been a hard phablet to get hold of since it hit the markets in November. Last month, supplies were running out of stock within hours on Google Play Store. Now Google Chief Financial Officer Patrick Pichette has officially admitted that the company’s fourth quarter results were hurt by Nexus 6 supply issues.

Google confirms the scarcity of Nexus 6

The Mountain View-based company almost exited the smartphone business by selling Motorola Mobility to Lenovo in October last year. But it still has Nexus range of devices in its stable, though they are manufactured by Motorola, HTC or LG Electronics. At the fourth-quarter earnings call, Patrick Pichette said the company was facing “real issues” and could not supply enough devices to meet demand.

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Supply problem is nothing new to the Nexus line of phones. Past Nexus models had also suffered from supply constraints. That’s because Google designs Nexus smartphones and tablets not to sell as many units as possible. The company aims to use it as a guide to other Android smartphone vendors.

The Nexus 6 issues caused weakness in Google’s “other” revenues category. The company said other revenues rose 19% YoY to $1.95 billion, a dramatic slowdown from 50% growth in each of the first three quarters of 2014. Pichette said the company’s results were also negatively affected by a strong dollar. About 56% of the search engine giant’s revenues come from outside the U.S. Currency fluctuations hurt the company’s Play Store revenue, especially in Japan.

Google’s Q4 earnings miss estimates

On Thursday, Google reported $18.1 billion in revenues and $6.88 per share in adjusted earnings. Though its revenues were well above the Wall Street consensus of $14.45 billion, earnings fell short of analysts’ projection of $7.12 per share. Google’s full-year revenues rose 19% YoY to $66 billion. With $12.43 billion, Sites revenues accounted for 69% of Google’s total revenues. Network revenues came in at $3.72 billion, contributing 20% to the total. Other revenues made up the remaining 11%.

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