Google's Profit Rises As Revenues Grow 22%

(RTTNews) - Google Inc (GOOG, GOOGL) Thursday reported an increase in second-quarter profit as demand for ads on websites lifted revenues by 22 percent, which also surpassed Wall Street estimates.

Google Class A shares gained 2.2 percent in after-hours trade on the Nasdaq.

The search engine company has benefited, in terms of ad volume, from mobile and video advertising; but concerns remain over weak ad pricing.

Google said payment from advertisers for the quarter slid 6 percent from last year, although aggregate paid clicks jumped 25 percent.

The Mountain View, California-based company posted second-quarter net income of $3.42 billion or $4.99 per share, compared with $3.23 billion or $4.77 per share last year.

Results for the quarter include, among other items, stock-based compensation expense of $880 million.

Excluding items, adjusted earnings for the quarter were $4.18 billion or $6.08 per share. On average, 42 analysts polled by Thomson Reuters expected earnings of $6.24 per share. Analysts' estimates typically exclude special items.

Revenues for the quarter climbed to $15.96 billion from $13.11 billion in the prior year. Thirty-three analysts had a consensus revenue estimate of $15.62 billion for the quarter.

Revenue from the company's own websites increased 23 percent year-over-year to $10.94 billion, and revenue from network business climbed 7 percent to $3.42 billion.

Traffic acquisition costs, or TAC - the part of revenue Google shares with advertising partners - totaled $3.29 billion for the quarter.

Results were partly hurt by expenses that climbed to $11.7 billion from $9.2 billion last year. This was partly due to higher research costs; Google has been making investments in businesses and on innovations.

In June, Google agreed to buy Skybox Imaging, a satellite imaging company, for $500 million, which Google expects will help improve its maps services.

Google has been striving to integrate Android software into consumer products, at a time when Apple and Samsung lure consumers to gadgets that operate within their ecosystems.

Google last month announced key developments in Android; among other things, it unveiled Android TV, a version of Android software designed to play videos, games and other apps on televisions.

To unshackle the burden of unprofitable businesses, Google in early 2014 divested its Motorola Mobility unit to Lenovo for $2.9 billion.

Meanwhile, Yahoo Inc (YHOO) results were not that enthusing. The company on Tuesday reported a drop in quarterly profit, hurt by weak display advertising revenue. CEO Marissa Mayer, who has been leading Yahoo for about two years, is under pressure to resuscitate the company's waning display business, but has not found much success.

On Thursday, GOOGL closed at $580.24, down $10.38 or 1.76%, n a volume of 2.7 million shares. In after hours, the stock gained $12.29 or 2.12%.