Google Profit Misses As Stronger Dollar, Lower Ad Prices Weigh; Stock Up 4%

(RTTNews) - Google Inc (GOOG, GOOGL) on Thursday reported a higher profit for the first quarter, driven by an increase in the volume of ads. However, both earnings and revenues for the quarter came in short of Wall Street estimates, hurt by a stronger dollar as well as a seven percent drop in ad prices.

The search engine giant said it continues to see momentum in mobile advertising business and opportunities with brand advertisers. Google shares gained 4 percent in after-hours trade on the Nasdaq.

During the quarter, Google's aggregate paid clicks increased 13 percent from a year ago, while cost-per-click fell 7 percent.

Apart from falling ad prices, Google also has had to compete with the likes of Facebook (FB) and Amazon (AMZN) to attract advertisers. Another concern is the user shift to smartphones and tablets, utilizing specific mobile apps, thereby making redundant a range of searches.

Google on its part is making investments in entirely new technologies, including driver-less car, though its still some time from fruition. On Wednesday, the company unveiled its much expected U.S. wireless service, Fi.

Google, based in Mountain View, California, posted first-quarter net earnings of $3.59 billion or $5.20 per share, compared with $3.45 billion or $5.04 per share last year.

Excluding stock-based compensation expense and other one-time items, adjusted earnings for the quarter were $6.57 per share, compared with $6.27 per share a year ago. On average, 42 analysts polled by Thomson Reuters estimated earnings of $6.60 per share for the quarter. Analysts' estimates typically exclude special items.

Google said its revenues for the first quarter increased 12 percent to $17.26 billion from $15.42 billion in the prior year. Thirty-two analysts had a consensus revenue estimate of $17.50 billion for the quarter.

Excluding the impact of currency, the company's revenues were up 17 percent.

Traffic acquisition costs - the part of revenue Google shares with advertising partners - totaled $3.35 billion in the quarter, up from $3.23 billion last year, Google said. Excluding TAC, Google reported revenues of $13.91 billion for the quarter.

The company's operating margin for the quarter dropped to 26 percent from 27 percent a year ago.

The sustained performance comes despite Google being under pressure from European regulators who accuse the company of indulging in anti-competitive practices.

GOOGL closed Thursday at $557.46, up $8.28 or 1.51%, on a volume of 3.7 million shares on the Nasdaq. In after hours, the stock gained $20.61 or 3.70% at $578.07.