Google rebuts the naysayers

The search engine giant's strong holiday season bodes well for 2013.

By Jonathan Berr Jan 23, 2013 11:41AM
Image: Dollar sign on keyboard ( Corbis)Google (GOOG) had a merry holiday season and Wall Street expects the good times to last throughout the year.

Not only did the company post better-than-expected quarterly results Tuesday, it was able to rebuff concerns on Wall Street about slowing growth. As a result, shares were up nearly 6% Wednesday.

As Reuters and others pointed out, Google's advertising rates fell less than expected in the quarter. Advertising revenue rose about 22% to $12.9 billion and paid clicks jumped 24%, according to the Wall Street Journal. Investors are optimistic that the deal for Motorola Mobility, which posted a $152 million loss in the quarter, will pay off as Google works its way through the unit's robust pipeline. Growth in international markets was also strong.

On the earnings conference call, CEO Larry Page said he was "incredibly optimistic about the opportunities we have as a technology company." Wall Street was also impressed.

"It’s big, bad Google doing pretty well," Jordan Rohan, an analyst at Stifel Nicolaus & Co., told Bloomberg News. "Google continues to monetize its searches very well."

Profit rose to $2.89 billion, or $8.62 per share, from $2.7 billion, or $8.22 a share, a year earlier. Revenue, excluding the Motorola Home business which the company plans to sell, rose 36% to $14.42 billion. Excluding fees Google pays to partners, revenue was $12.2 billion, below Wall Street's expectations. Excluding one-time items, profit was $10.65 a share versus $9.50 a share a year earlier, beating the $10.50 average estimate of analysts surveyed by Bloomberg News.

Investors are hoping that Apple (AAPL) CEO Tim Cook exudes optimism as well when the maker of the iPhone, iPad and MacBook is due to report earnings later Wednesday. Analysts are predicting that the company will report its first quarterly loss in more than a decade.

--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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