Google has released its financial results for the last three months of 2012 and the company is looking healthy but not without a few minor concerns. First the numbers. Google had revenues of $14.42 billion during Q4 2012, up by 36% when compared to the fourth quarter of 2011. For the whole of 2012 over $50 billion flowed into Google. However, running all those data centeres isn’t cheap and of the $14 billion Google spent nearly 5 billion in the fourth quarter (33% of its revenue) in operating expenses. However once all the calculations are done Google made a profit of $2.89 billion in Q4.
For Android this means that the custodian of the OS is healthy and making money. However there is another side to the story. Google makes 96% of its money from sites which it runs (like Google Search, YouTube and Gmail) together with the advertising money from all those web sites which carry Google ads. Only 6% of Google’s money comes from “other” activities. The Google Play store is likely to be included in the $8.64 billion of Q4 revenues but how much money the store makes wasn’t published.
In terms of money which Google directly makes from Android, that is probably very small. Google’s long term aim is to dominate the mobile operating system market and so capture the precious advertising clicks on which it makes money. However it won’t be easy, advertisers pay about half as much for an ad on a mobile device than a desktop, partly because the effectiveness of mobile ads isn’t yet consider high especially when compared to web site adverts.
As for Motorola Mobile, its revenues were $1.51 billion for the quarter and the wholly owned subsidiary employs 11,113 people. What Google can fully do with Motorola hasn’t yet been seen. There are clearly a lot of engineers at Motorola and Google really needs to put them to work to make Android shine even more.
Other than making more money from Android, the only concern for Google is that the average cost-per-click (which determines how much money Google gets after it has shared a percentage with the site carrying the ad) decreased approximately 6% when compared to the same quarter of 2011, however it was up 2% when compared to the third quarter of 2012.
For those in the UK it is nice to see that Google had $1.30 billion of revenue from the island, that represents 10% of Google’s revenues in the fourth quarter. Google recently completed a £1 billion ($1.5 billion) property deal in London. The company said it will build a new office complex on 2.4 acres of disused land behind King’s Cross Station for use as its UK HQ.
Do you have any Google shares?