Smartphone-centric lifestyles brought a shift

Google takes hit on slower-than-expected growth

GMT 12:15 2015 Friday ,30 January

Arab Today, arab today Google takes hit on slower-than-expected growth

Google reported net profit up 41%
San Francisco - Arab Today

Google profit jumped in the recently ended quarter, but the leap fell short of market expectations as smartphone-centric lifestyles brought with them a shift to cheaper mobile ads.
Google shares whipsawed, losing ground and then gaining, as Wall Street came to grips with concerns about a shift to lower-cost ads on mobile devices and the technology titan's penchant for spending on "moonshots" like self-driving cars and Internet-linked Glass eyewear.
"At Google you have strong-willed leaders who tell shareholders they are interested in the long haul and want to invest in interesting long-term projects," said Forrester analyst Frank Gillett.
"I personally like the willingness of a company to swing for the fences, but it is not popular with Wall Street traders, to say the least."
Lifestyles are shifting from using laptops or desktop computers to get online to using smartphones or tablets in what Forrester refers to as 'the mobile mind shift,' according to the analyst.
Google has prospered on targeting ads served up with Internet search results on computers.
"As people increasingly embrace the power of the smartphone, they are using Internet search engines less and using apps more," Gillett said.
"It is a gradual shift but it is a profound one because it changes how Google reaches people; the whole model is shifting."
- Innovating to endure -
Google is devoting resources to self-driving cars; Glass eyewear; Fiber super-fast Internet networks, and a Project Loon aimed at delivering Internet to remote or rural areas using gear floating from high-altitude balloons.
While critics see such endeavors as Google straying from its area of strength in online search, some people view the moves as innovation aimed at keeping the company relevant to evolving lifestyles.
Google services such as search and maps could become features in autonomous car consoles or Internet-linked eye wear. More people using faster Internet could increase the ranks of people tapping into the Internet firm's products from YouTube to Gmail or cloud storage.
"Innovation doesn't happen if you manage to quarterly earnings," Gillett said.
During an earnings call, Google chief financial officer Patrick Pichette said it stuck to benchmarks when it came to deciding whether to continue backing projects such as Fiber.
"In other cases, when teams aren't able to hit hurdles, we take a pause and reset strategies as we did in terms of Glass."
This month, Google halted sales of its Internet-linked eyewear Glass but insisted the technology would live on in a future consumer product.
Glass allowed users to share pictures or video and search the Internet hands free. Google did not indicate when a general consumer version of the eyewear might debut.
"We think they are retrenching the technology to find a new use case," Forrester's Gillett said.
"If they were going to kill Google Glass, they would have killed it."
Google's Glass team became a separate company unit answering to Tony Fadell, co-founder of Nest.
Google bought the smart thermostat maker early last year in a multi-billion-dollar deal and brought the former Apple executive on board in the process.
- Low-budget Internet users -
The Internet colossus reported net profit up 41 percent year-over-year at $4.76 billion in the final three months of 2014. The profit translates to $6.88 per share, below the consensus forecast of $7.11 per share.
Revenues were up 15 percent in the quarter to $18.1 billion, also slower than anticipated as Google saw slowdowns in some of its online advertising metrics such as costs per click.
"Internet growth is slowing worldwide, and the new users who come online will have and command far less spending power, while gravitating towards local alternatives and apps rather than web models in their usage," said Jan Dawson at Jackdaw Research.
"Google really doesn't seem to have an answer for any of these."
Google shares fell immediately following the results in after-hours trade, but later recouped the losses and traded up more than a percent to $518.10.
Google results were dented by a strong dollar, reducing the value of income earned outside the United States.
Production problems also hurt its ability to meet demand for a new Nexus 6 smartphone, Google's Pichette said.
Source: AFP

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