Four Things That Google’s Q4 Profits Tell Us


On the financial front today, all talk surrounds Google’s stunning fourth quarter results which showed the search giant scooping up a dizzying $14.42 billion in profits, defying even the most optimistic of analysts’ expectations.

Larry Page and Sergey Brin will undoubtedly be patting themselves on the back for a job well done, but really the news doesn’t come as that much of a surprise given how aggressive the company has been, even if $14 billion is a big, big number. But often, what’s more interesting are the smaller numbers that make up the bigger picture, so without further ado, lets have a closer look at Google’s big announcement.

1. Google’s riding on the economic upturn:

Believe it or not, the economy is doing much better than the media likes to paint it. Think – Google derives more than 90% of its income from advertising, but that type of marketing is actually something of a luxury that few struggling businesses can afford. Back in 2009 advertising expenditure fell of the cliff, but these days we’re seeing a period of stability that Google is rapidly taking advantage of.

2. Google has stopped the CPC rot:

Techcrunch points out in a blog post that one of the biggest reasons for Google’s good fortune is the stabilizing ‘cost-per-click’, the metric that measures how much advertisers are paying each time a web user clicks on one of its paid ads. Last summer was the real low point for Google, when its Q2 CPC fell by 15% year-on-year. Since then, things have improved rather dramatically, and while its current CPC is down 6% on the year before, it’s up 2% up for the third quarter. All the while, impressions were increasing too, which means that customers are getting more bang for their buck.

3. Google’s overheads are getting bigger:

Google reported expenditures of $1.02 billion for the fourth quarter, most of which was invested in new data centers, production equipment and other purchases related to its facilities. According to its report, Google will continue to make “significant capital expenditures” for the foreseeable future – a forewarning perhaps, that it’s planning to weigh even further into the cloud where Amazon currently rules the roost?

4. Google’s embarrassed about Google+:

As noted by CNet, Google spent more than an hour going over just about every single aspect of its businesses with a fine-toothed comb, with the notable exception of its social media platform.

Google+ didn’t get a single mention, which can leads us to make two simple observations. First, Google + isn’t making very much money, and second, Google is embarrassed to admit that – hardly surprising given how much effort the company’s put into it. Interestingly CNet asked Google for a comment, but the search giant has yet to respond on that point.