Google reports profit in 2013 Q3, but its Motorola buy proves risky

2.1.2014 Daniel Jaramillo

It’s been a good-news-bad-news kind of a third quarter at Google. The company reported yet another profitable trimester, but a deeper analysis reveals several potentially problematic divisions, mainly Google’s advertising business, as well as their Motorola phones sales taking a plunge. In a recent statement relating to their success with transitioning away from the PC-dominated world and to a more user-friendly and mobile ecosystem, Google’s CEO lauded the company’s dedication to achieving a cohesive and engaging experience for the end user, no matter the device.

However, it seems that that device is certainly not going to be Moto X, Google’s highly marketed and rather disappointing smartphone, which was supposed to reinforce the fact that the last year acquisition of Motorola was the right way forward. Now, it seems that the makers of Android are going to have to work a lot harder to build a phone that would achieve the same kind of popularity as their operating system.

When it comes to the actual numbers, the company announced that its revenue for the third quarter peaked at almost $14.9 billion, which would be a 12% incline compared to the same quarter of 2012. Its’ net income is estimated at $2.97 billion, a 36 percent increase from last year, with their partner sites and the websites Google itself owns raking in major cash as well ($3.15 billion and $9.39 billion respectively). With these kinds of stats, it seems that the market volatility is a long way from affecting the tech giant, as the increase in their share values ($8.75 as opposed to last year’s $6.53 per share) proves rather well. However, there’s also a darker side to the parade.

Firstly, there were mixed results with the company’s advertising business. On one hand, paid clicks themselves rose by 8% over the year’s 2nd quarter, but their cost (what Google charges if somebody clicks on a given ad) fell by 8% in 2012, and half that number in 2013. And probably more alarming, Google’s $12 billion acquisition of Motorola Mobility in 2012 now proves to be much more risky than expected. Motorola units’ sales took a significant 33% drop, totalling $1.18 billion over the third quarter, which is definitely not what Moto X was supposed to achieve. So even though there’s a long road ahead before we can call trouble for Google, expect the company to take a 180 degree turn with their smartphone division soon enough.

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