Google investors are flying high today. Following the company’s announcement last night of better-than-expected earnings, its shares today opened higher at over $976 and within just a few hours, hit an all-time high of $1,015.46. Throughout the day, the price hovered at around $1,005, but rallied at the closing bell to close at over $1,011, a jump of 13.8% since yesterday.
The boost in share price has earned Google access to an exclusive club of companies whose single share price costs more than $1,000. Others in that club include Priceline.com, Berkshire Hathaway, and meat processor Seaboard. And it pushes Google to the no. 3 spot in market capitalization among U.S. companies, behind Apple and Exxon Mobil.
In its Internet business, Google reported revenue of US$14.89 billion, a 23% net increase for the period ended Sept. 30, and a 12 percent increase year-over-year. After taking into account commissions and fees, or traffic acquisition costs that Google pays to other sites that run its ads, the company’s sales were $11.92 billion. Google’s net income for the quarter was $2.97 billion, about 36 percent higher than the $2.18 billion reported for the third quarter last year.
Google’s quarterly sales increased despite mixed results within its advertising business and a 33% decrease in sales within its new Motorola Mobility division, for which Google paid more than $12 billion to acquire last year. This August the company revealed the much-hyped Moto X–its first major smartphone since the acquisition–but the Moto X didn’t go on sale early enough to help Motorola in the recent quarter. Motorola Mobility sales were $1.18 billion, a 33 percent drop since last year, when the company still had several devices on the market from before the acquisition.
Fortunately for Google, its Android mobile operating system still dominates the smartphone scene, and the company has also seen an expansion of its line of Chromebooks. Google is expected to soon launch the 5th generation of its popular Nexus line of Android phones and tablets, after numerous leaks. The Mountain View based Chocolate Factory also recently announced the upcoming release of Android 4.4, dubbed “Kit Kat.”
In its advertising business, Google reported mixed results. Paid clicks, or the clicks on search ads paid for by advertisers, increased by 26 percent over the third quarter of 2012, and increased by 8 percent over 2013’s second quarter. But the cost of paid clicks, or the money Google pays ad affiliates when someone clicks on an ad, fell by 8 percent year-over-year, and decreased by 4 percent compared to this year’s second quarter, Google reported.
Although mobile ads tend to make less money because people click on them less often, Google executives emphasized in the company’s earnings report the huge number of mobile devices on which it now places ads, and said it expects the number of mobile outlets to keep growing.
“We are closing in on our goal of a beautiful, simple and intuitive experience regardless of your device,” said Google CEO Larry Page, talking about the company’s focus on the growing trend of using mobile devices.
Reuters has more analysis of Google’s stock rally here.
