Google Misses Street’s Estimates Due to Rising Dollar And Falling Ad Prices

The world’s largest search engine, Google Inc. (NASDAQ:GOOGL), reported on Friday its quarterly results for last 3 month-end on December 31st. The company missed analyst forecast of earnings and revenue, attributed to unfavorable exchange rate and falling online advertisement prices. Although, the tech giant missed analysts’ forecast, it produced a strong quarterly result. The stock price of Google Inc. surged more than $29.

Google net revenues for the last quarter of 2014 were $18.1 billion, compared to $15.71 in the same period last year. Net revenues rose 15% year-on-year (YoY).

The earnings of the company jumped 41% to $4.76 billion ($6.91 per share), up from $3.38 billion ($4.95 per share). Adjusted earnings per share (EPS) were $6.88.

The Wall Street estimated EPS of $7.11 with $14.7 billion net revenues.

"Business is slowing. The core is slowing. And what we're saying is, it's going to look on paper even worse as the dollar strengthens. And we are not at that point where mobile monetization is improving," an analyst of BGC Partners, Colin Gilis, said. "The thesis that the landscape is changing and Google is missing out - I don't think it will hold to be true, but they haven't squelched it."

According to CFO of Google, Patrick Pichette, “strong U.S. dollar”, “unusual charges” and incapability of company to meet Nexus 6 demand were the reasons the earnings fell in the last quarter.

California-based company reported that currency headwinds hit its revenues by about $541 million in the fourth quarter, compared to same period last year. The strengthening of dollar reduced Google’s earnings in the foreign markets.

Total paid clicks rose 14% YoY and 11% quarter-over-quarter in the fourth quarter of 2014. Although, frequency of clicks increased during the period, Google’s digital advertisement average price decline persisted. People have started using Google services through their smartphones and tablets, where ad prices are comparatively low. Average price per ad slot plunged 3% YoY in the quarter.

Moreover, heavy competition from Facebook Inc., (NASDAQ:FB), has also put a lot of pressure on the technology giant. Facebook’s mobile ads doubled over the year in fourth quarter of 2014.

Google’s operating expenses growth is getting faster than its revenues. Operating-profit margin of the company was 24% in the quarter, while operating-profit margin in the prior-year quarter was around 24%.

Google work-force has increased to 53,600, as it hired around 5,000 workers in last six months. General and administrative expenses mounted 34.54% YoY to $1.59 billion. Research and development expenses rose 45.53% to $2.81 billion. Cost of revenues increased by 10.68% to $6.92 billion.

Stock of Google jumped more than $29 after the result was announced by the company.

How Apple Managed To Steal The Limelight From MWC 2015?

It is nothing out of ordinary to say that Apple Inc. has a tendency to overshadow a complete array of tech industry events without much effort even, but only with a minor gesture itself.

Over the years Apple has eschewed megalithic, acclaimed technology exhibitions and trade shows. In January only the company stole the limelight of consumer electronics and technology show CES 2015 in Las Vegas, and now it is clear that the company is planning the same for Mobile World Congress 2015 which is currently taking place in Barcelona.

These platforms, where rest of the consumer devices manufacturing companies chose to launch their new flagship products or devices, Apple Inc. (NASDAQ: AAPL) always execute contrarily and differ with the norm, to accolade their actions with their vastly renown philosophy of "think different".

                    

Likewise Apple plan out their own personalized events where they launch their new products and release them. In these press conferences Apple make announcements, and satisfy the die-hard iOS consumer base with the launch while creating insatiable curiosity by leaving behind an incentive for the next project they company has already taken up to begin the rumor mill in the market.

This simple announcement is enough to take in the oxygen out of all the other tech ongoing events.

World Mobile Conference that was due in two days’ time in Barcelona, invitations were sent out by Apple Inc. for an exclusive event for March 9th. The invitations went out with the words "spring forward" only. However, according general acceptance, this event is expected to be organized for the launch of Apple iWatch.

This was enough to burst the bubble of the buzz regarding MWC and shifted the conversations to Apple event.


Not only this, but Apple clearly knew how to hinder the launch of its rival Samsung’s flagship product Galaxy S6, by deciding to release and promote the camera photography results from iPhone 6. An entire campaign that goes by #ShotOniPhone is launched on its homepage, display scenic photography captured by iPhone 6 making Samsung’s keynote look insignificant in comparison.

According to Apple CEO Time Cook, the launching event is part of the marketing cycle the company follows given that the smart watch would be made available on shelves by April. It is clear that it wasn’t a coincidence on Apple’s part. The company builds up its lead time, 48 hours to be exact after the multiple launches of the products in the mobile industry.

Apple is no kid to risk a small time period in between, but the company also doesn’t have to demonstrate full power towards its competitors directly even, because to threaten, the giant doesn’t have to exhibit.