Google 2Q Net Up 11% on Higher Paid Clicks

07/19/2012| 04:33pm US/Eastern

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   By Ben Fox Rubin 
 

Google Inc.'s (>> Google Inc) second-quarter profit grew 11%, aided by continued growth in its core Internet search business, though advertiser payments per click kept falling.

Shares rose 3.3% to $612.66 after hours as the earnings beat market estimates. The stock is down 8.2% so far this year.

The latest quarter is the company's first after it closed a $12.5 billion deal for Motorola Mobility Holdings Inc. in May. The new unit brought in $1.25 billion in revenue, with $843 million from the mobile segment and $407 million from the home segment. Its operating loss was $233 million.

Paid clicks, a measure of how frequently consumers click on Google's advertisements, rose 42% from a year earlier and were up 1% from the first quarter. The average cost that advertisers paid Google per click fell 16% from a year earlier and rose 1% from the prior quarter.

Google's shares have moved sideways in the past year as investors appear unsure about the growth prospects of the company's core search business as well as its purchase of Motorola Mobility.

Though the company boasts a dominant market share in search advertising and consumer clicks continue to grow, Google's search business faces new challenges as technology shifts toward mobile devices. Google generally pulls in less revenue from its services on mobile phones than it does on personal computers.

In addition to its Motorola deal, the company continues to expand into other hardware manufacturing, as its turf war with other tech giants heats up. Google recently unveiling a $199 tablet to rival Apple Inc.'s (>> Apple Inc.) iPad and Amazon.com Inc.'s (>> Amazon.com, Inc.) Kindle.

Google posted a second-quarter profit of $2.79 billion, or $8.42 a share, up from $2.51 billion, or $7.68 a share, a year earlier. Excluding stock-based compensation and other items, profit rose to $10.12 from $8.74 a share. Net revenue, not including Motorola Mobility, improved 21% to $8.36 billion.

Analysts surveyed by Thomson Reuters expected earnings of $10.04 a share and net revenue of $8.41 billion, not including the Motorola Mobility unit.

Total costs jumped 47%.

Write to Ben Fox Rubin at ben.rubin@dowjones.com

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