Google's (GOOG) full-year results missed Wall Street's forecasts on several fronts, but investors bid its shares up 5 per cent nonetheless. That likely reflects the US search and advertising giant's sustained growth - net income rose 12 per cent to $14.4bn (£9.6bn) - and its cheaply-rated shares.
Soaring usage of mobile devices has weighed on Google, which derives a large chunk of its sales from desktop searches and advertising. Average cost per click - a measure of how much advertisers pay when people click on Google ads - fell last year, and growth in paid clicks slowed to a five-year low of 14 per cent in the fourth quarter. Another concern may be that full-year capital spending surged by nearly half and operating expenses rose almost a fifth, outpacing sales growth of 19 per cent. The upshot was that Google's fourth-quarter operating margin narrowed by four percentage points year-on-year to 24 per cent.
A bright spot for investors may be bumper sales of Google's Android operating system. Over 1bn Android devices were shipped in 2014, says industry research firm Strategy Analytics, compared with Apple's 193m shipments. And more than four fifths of global smartphones use Android, giving Google a tight grip on a key growth market.
Broker Topeka Capital Markets expects sales and EPS to rise 16 per cent to $60.9bn and $29.75 respectively (from $52.5bn, 25.59p in 2014).
