Google Inc. reported weaker-than-expected first-quarter profits,
hurt by slowing growth and the rising U.S. dollar.
The search giant reported revenue of $17.26 billion, up 12% from
$15.4 billion in the year-ago period. Excluding payments to
companies that syndicate its ads, revenue was $13.91 billion, below
the $14 billion estimated by analysts polled by FactSet.
Excluding currency headwinds, revenue rose 17%, Google said.
Net income rose to $3.59 billion, or $5.20 per share, from $3.45
billion, or $5.04 per share. Excluding certain expenses like stock
compensation, Google reported per-share earnings of $6.57. Analysts
had expected $6.61 on that basis, according to FactSet.
Google shares rose 1.4% to $564.47 in after-hours trading.
The company's shares, up 4% over the past year, have trailed the
Nasdaq Composite index, which has risen 23%, largely because of
investor concerns about slowing growth and rising expenses.
Google's growth has slowed as its core search advertising
business has matured. Facebook Inc. has become a formidable rival
for brand advertising, expected to be the next big pot of ad
dollars to shift online from traditional areas like television.
"Just two years ago Facebook ads were a joke, but now they're
actually better than [Google ads] in about ten different ways,"
said Larry Kim, founder of online advertising agency WordStream. He
highlighted Facebook's ability to target ads at more specific
groups of people and the fact that the ads work so well on
smartphones.
A Google spokesman declined to comment.
Facebook said Wednesday that first-quarter revenue rose 42% to
$3.54 billion; it also cited currency effects. The faster growth
suggests Facebook is gaining market share from Google in digital
advertising.
Write to Rolfe Winkler at rolfe.winkler@wsj.com
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