Google 4Q earnings rise despite Motorola woes as profit powers stock 5%
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It proved to be a difficult quarter to decipher because of an accounting quirk and the additions of new business lines that muddied the comparisons with the previous year.
For instance, Google Inc. didn't own Motorola Mobility in 2011, having completed its $12.4 billion acquisition of the troubled handset maker eight months ago. What's more, the Google is bringing in more revenue from tablet computers, which it began selling under the Nexus brand during the final half of last year.
Things were further complicated by Google's recent agreement to sell a part of the Motorola Mobility division that makes cable TV boxes. That division is now accounted for as a discontinued operation whose revenue wasn't booked in the latest quarter, even though it will remain a part of Google until the $2.35 billion sale is completed later this year.
Under that equation, revenue surged 36 percent from the previous year to $14.4 billion.
After subtracting advertising expenses, Google's revenue totaled $11.3 billion. That figure was well below the average analyst estimate of $12.1 billion, according to FactSet.
But many of the analyst forecasts included revenue from Motorola Mobility's set-top division, which Google excluded from its breakdown. Had the set-top division been included in Google's accounting, the company's net revenue would have matched analyst estimates.
The performance lifted Google's stock by $34.14, or 4.9 percent, to $737.01 in Tuesday's extended trading.
Google has been able to offset the slump in its search advertising prices by selling more video advertising on its YouTube subsidiary and other more graphical forms of marketing. The number of clicks on Google ads has still been rising, too. That's important because the company typically gets paid by the click. In the fourth quarter, Google's total ad clicks rose 24 percent from the previous year.
To gain a foothold in the mobile market, Google bakes its services into its Android software, an operating system that it gives away to makers of smartphones and tablets.
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