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Google's Rise in Profits Continues Following Great Q1.
03 May 2012
Google is continuing its excellent financial form. It may not be a surprise to the hundreds of millions of people that see the company's logo a couple of dozen times each day, yet Q1 revenues outperformed predictions from even the most informed of economic experts by quite a degree - and there's certainly no sign that this is going to slow any time soon.
Google is continuing its excellent financial form. It may not be a surprise to the hundreds of millions of people that see the company's logo a couple of dozen times each day, yet Q1 revenues outperformed predictions from even the most informed of economic experts by quite a degree - and there's certainly no sign that this is going to slow any time soon. During the first quarter of 2012, revenues jumped to $10.65 billion (£6.61 billion), which resulted in net income of $2.89 billion (£1.79 billion), or $8.75 (£5.43) per share. That's good going for investors. Ultimately, it means that Google has increased its revenue by a massive 24 per cent in just one year. After taking into account its ad commissions, the firm had revenue of $8.14 billion (£5.1 billion) in the first quarter, which outdid analyst predictions by around £31 million. The main thing cited as the primary driver of this rise in profits is the 39 per cent increase in paid clicks, though interestingly, search-driven text ads continued to fall in popularity, dropping by 12 per cent in the space of 12 months. Chief executive officer Larry Page was happy to weigh in on Google's success soon after the numbers were revealed, celebrating the fact that his company had a strong quarter. However, the quarter-on-quarter growth of Google was extremely minimal - it rose by just £37.8 million from the base of $10.58 billion (£6.57 billion) registered in Q4 2011, which is a lot less significant when compared to the £536 million rise between Q3 and Q4 2011. That was also short of expectations, too. However, the fortunes of Google could be given a great push by its board of directors, which has moved to discuss the creation of a brand new class of non-voting shares that will be given as a dividend to all current shareholders. The idea is incredibly clever in that it protects the long-term direction of the company and preserves the voting power of key shareholders. Employees given stock in Google in the coming years will get these non-voting shares, meaning that existing shareholders keep hold of power. Page himself has been open about the agreement being announced for the good of the bigger players in Google's future, but still highlighted how it would be nothing but a good thing. Page didn't directly reference the fact that profits would be a major focus of this change in stock policy - which will likely be pushed through in June - alluding to the fact that it could hamper future creative projects. Nonetheless, it's clear that as more people invest in Google, the company needs to protect itself - don't be surprised if revenue per share has another 24 per cent increase in the coming year.