April 15th, 2011

Google bullish with sales up 27%, but profits below expectations

Google announced its results at a quarterly earnings call this week. Sales were up 27% for the quarter ended March 31st with revenues at $6.54 billion, an increase from $5.06 billion during the same period last year. This was ahead of many analyst expectations of $6.32 billion.

However, quarterly profit was behind expectations as operating expenses increased by 54% to $2.84 billion. Google boosted its spending significantly on both marketing and employees during the first three months of the year.

Employee numbers and cost per employee have both risen over the year. Google now has26,316 employees, up from 20,621 a year ago and the company handed out 10% across-the-board salary increases this year.

Capital expenses have also risen. Google reported capital expenditures of $890 million, up from $239 million during the first quarter of 2010.

However, Google remain bullish and their sales remain strong. Paid clicks were up 18% year-over-year, while the average cost-per-click was up 8%. Overall, sales at Google-owned sites were up 32% to $5.88 billion, while sales generated through AdSense increased 19% to $2.04 billion.

Google’s executives said the company would not be slowing down its marketing spending, especially on Chrome, which they described as being “key.”

You Tube
In response to Google reportedly investing as much as $100 million on original content on You Tube, SVP Jeff Huber confirmed that YouTube was interested in “long form premium content”. Huber also mentioned its recent purchase of webisode maker “Next New Networks” as reflective of content the site wanted to emphasise.

On Mobile, Huber said more than 350,000 Android devices a day are being activated and more than three billion Android apps had been installed. He referred to the smartphone as being “an extension of the person” that would play a role in an increasing number of human behaviors. Executives also disclosed that the company had “tripped” into a billion-dollar mobile business, which was why Google is so bullish about its future.

1 comment to Google bullish with sales up 27%, but profits below expectations

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