BUSINESS

Google revenue beats estimates on robust ad demand

Google's shares rose after the company said ad sales increased
Google earns $3.4 billion during the second quarter, up 6% from $3.2 billion a year earlier
Google's second-quarter revenue totals nearly $16 billion, a 22% increase from last year

Google Inc.'s second-quarter earnings rose 6% as World Cup fever drove more traffic to the Internet company's search engine and YouTube video site.

The report released Thursday also showed that Google's advertising prices are still dropping to extend a nearly three-year slump. Meanwhile, the Mountain View, Calif., company's expenses are steadily rising as it hires more workers, promotes products and ventures to new technological frontiers such as Internet-connected eyewear, driverless cars and robots.

Investors saw more positives than negatives in the second-quarter numbers. Google's stock, which closed down $8.93, or 1.5%, at $573.73, grew $5.77, or 1%, to $579.50 in extended trading.

Google earned $3.4 billion, or $4.99 a share, during the April-June period, compared with $3.2 billion, or $4.77, a year earlier.

Revenue totaled nearly $16 billion, a 22% increase from last year.

Google's revenue growth is being held back by a persistent decline in the average prices for the ads that appear alongside search results and other Web content, a measure known as "cost per click." The average price fell 6% from the same time last year, marking Google's 11th consecutive quarter of erosion.

Ad prices have been sagging because marketers haven't been willing to pay as much to pitch consumers who are squinting at the smaller screens on the smartphones that are drawing eyeballs away from desktop and laptop computers. Google executives are confident that advertisers eventually will be willing to pay more to connect with prospective customers on smartphones and tablets as mobile computing becomes even more pervasive.

The desktop-to-mobile transition would be hurting Google even more if people weren't clicking on ads more frequently. The volume of activity is important because Google bills advertisers when people click on a promotional link. Google's paid clicks during the second quarter climbed 25% from last year.

The World Cup soccer tournament that kicked off in mid-June contributed to the higher volume. The tournament ended Sunday, meaning that Google is likely to reap additional benefits during the current quarter, which ends in September.

Copyright © 2015, Los Angeles Times
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