Sunday, January 27, 2013

Google Earnings Review: Hopeful Signs in a Multi-Screen World

Google reported QE December 2012 financial results on January 22

Google earnings showed hopeful signs this quarter, after the fundamentals were negatively impacted in 2012 with the acquisition and merger of Motorola. GAAP earnings per share were $8.22 and matched the prior year QE December 2011, but were short of the QE March 2012 record of $8.75. However, Non-GAAP earnings per share of $10.65 and cash flow per share of $13.94 were all-time highs.

Google sees the world as a global cloud plus a multi-screen environment from the user side. People now have a variety of devices to connect to the Internet and use more than one device per day. These can be a smartphone, tablet, notebook, desktop, etc. Google plans on being on your screen, your window to the Internet and the global cloud, via their products, regardless of device. Google would also like to build your device.

There is still some damage to repair in the earnings per share growth rate. The revenue growth rate continues healthy, but needs an assist from gross margin for the bottom line.

The reversal of the downtrend in gross margin (56.91%) is the most positive metric for this quarter. Operating and net margins responded accordingly. Last quarter, gross margin reached an abysmal and multi-year, if not all-time, low of 53.52%.

Revenues rose to an all-time high of $14.42 billion, powered by record regional revenues across the board: the United States, the United Kingdom, and Rest of the World. Operating income inched up to an all-time high of $3.39 billion. Net income of $2.886 billion just missed the record high of $2.890 billion in the QE March 2012.

"We ended 2012 with a strong quarter," said Larry Page, CEO of Google. "Revenues were up 36% year on year, and 8% quarter on quarter. And we hit $50 billion in revenues for the first time last year – not a bad achievement in just a decade and a half. In today's multi-screen world we face tremendous opportunities as a technology company focused on user benefit. It's an incredibly exciting time to be at Google."


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