Google misses: Ed’s Daily Notes for April 17th   3 comments

Google

Bloomberg: Google Revenue Falls Short of Estimates, Ad Prices Drop

Bad news for Google:

Google Inc. (GOOG)’s costs are rising as the search provider finds it harder to keep up with a shift to advertising on mobile phones and sales fell short of estimates.

Revenue, excluding sales passed on to partners, was $12.2 billion in the first quarter, missing a projection by analysts for $12.3 billion, according to data compiled by Bloomberg.

Google’s audience is steadily migrating to smartphones, where the company gets less money for marketing spots than on desktops and tablets. Facebook Inc. (FB) and other rivals are also challenging Google’s dominance in the online market. Even though Chief Executive Officer Larry Page is getting more advertisers to buy promotions, with total volume rising 26 percent, the average price for an ad fell 9 percent.

“Mobile is perceived as the single biggest risk over the near-term,” said Scott Kessler, an analyst at S&P Capital IQ Inc., who has the equivalent of a buy rating on the stock. “Mobile is definitely helping Google and many others in the number of volume-related metrics, but mobile has also had a notable negative impact on pricing.”

Net income rose to $3.45 billion, or $5.04 a share during the first three months of 2014, from $3.35 billion, or $4.97, a year earlier.

…Google is also spending more to expand its services, with costs rising faster than total sales, which rose 19 percent. Expenses climbed 23 percent to $11.3 billion in the latest quarter.

Chief Financial Officer Patrick Pichette said on a conference call that the increase in operating expenses was largely tied to legal costs and other spending related to acquisitions, especially of home-automation service provider Nest Labs. The search company is in good shape amid rising revenue and healthy profits, he said.

…Google’s other revenue, which includes the mobile Play store and hardware such as Chromecast, rose 48 percent from the year ago-period to $1.55 billion.

Overall, I am not concerned about Google. Google is still growing, and that is the main thing. Missing estimates just means Wall Street was too optimistic for this quarter.

The Daily Caller: The USPS wants to mine and sell data gathered from your mail

We were just discussing this the other day, so I had to include this story:

The United States Postal Service is looking to get in on the big-data-for-profit game played by tech giants like Facebook and Google, and begin mining and selling private data gathered from personal mail sent from and received by Americans everywhere.

USPS chief marketing and sales officer Nagisa Manabe recently told the forward-looking PostalVision 2020 conference that the post office is “actively looking for ways to build new business lines around what not long ago might have been considered science fiction,” eCommerce Bytes reports.

While some of those ideas included new delivery services from partnerships like grocery chains, others seek to increase revenues from advertising by mining, storing and analyzing customer data. By mapping those datasets and determining consumer behavior, advertisers and retailers could target more effectively through traditional mail, much the same way Facebook and Google target ads based on search, profile, email and other data.

Manabe described an example scenario in which a woman test drives two different types of cars and two different dealerships while trying to decide which to buy.

“We’re at the point where, all too soon… We’re going to know exactly that she was shopping at two different car dealers looking at cars, and both of those car dealers should be mailing her communication about that vehicle, right?” Manabe said.

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Posted April 17, 2014 by edmcgon in Earnings Season, News, Stocks, Technology

3 responses to “Google misses: Ed’s Daily Notes for April 17th

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    • plas,
      Thanks. That was thought-provoking.

    • Interesting article. It never ceases to astound me how fast technology changes and the effects these changes make on companies and society as a whole. I expect any day (and please don’t tell me it is already happening) I will just have to think my question and it will be answered. I am so old I am constantly saying something along the lines of “What did we do before the internet and/or I need to google this or that. Back to the article: with $15 billion in cash I like Google’s survival odds.

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