Google quarterly profit climbs 17pc on rising ad revenue

CEO Larry Page applauds another 'great quarter of momentum and growth' and vows 'continued hard work' as revenues from ads drive profits

PUBLISHED : Friday, 31 January, 2014, 9:18am
UPDATED : Monday, 03 February, 2014, 5:42pm

Google on Thursday reported that its profit in the closing quarter of last year climbed to US$3.38 billion on rising ad revenue.

“We ended last year with another great quarter of momentum and growth,” Google chief Larry Page said in the earnings release.

Google also declared it would pay a dividend in the form of Class C stock.

Google shares rose slightly in after-market trades to US$1,141.60, having closed the day up 2.57 per cent to US$1,135.39 on word of its deal to sell smartphone maker Motorola Mobility to China-based computer titan Lenovo.

Motorola was seen by analysts as a drag on Google profit and an irritant in its relationships with partners who crank out smartphones or tablets powered by the internet giant’s Android software.

Google has agreed to sell Motorola to Lenovo for US$2.91 billion, after a lacklustre two-year effort to turn around the smartphone maker it bought for US$12.5 billion.

The deal ends Google’s run as a handset maker after it biggest-ever takeover, which was announced in 2011 and finalised in 2012.

It also provides Lenovo footholds in smartphone and tablet markets where it is eager to gain traction while acting as a peace offering to Samsung and other partners that make devices powered by Google-backed Android software.

“It is win-win,” said analyst Tim Bajarin of Creative Strategies in Silicon Valley. “Google keeps the patents and the research group, and they keep partners off their back, while Lenovo gets what they need to get into the US smartphone market.”

Even under Google, Motorola failed to gain traction in a rapidly evolving smartphone market now dominated by South Korea’s Samsung and US-based Apple.

Google continues to have hardware plans that include Nest smart home thermostats, internet connected eyewear called “Glass,” and making Android smartphones and tablets with partners.

“We made great progress across a wide range of product improvements and business goals,” Page said of the final quarter of last year.

“I’m also very excited about improving people’s lives even more with continued hard work on our user experiences.”