Google Delivers A Tremendous Quarter

Google Q3 2013 earnings report

Google (NASDAQ: GOOG) announced its Q3 2013 earnings yesterday after market close. Coming on the back of disappointing results in Q2 2013 the results brought relief to Google investors. The company showed an uptick in all major indicators of its business.

The hardware segment comprising of the acquired Motorola mobility division saw its revenues increase for the first time on a quarterly basis since its acquisition by Google and Google’s overall revenue jumped 12% on a Y/Y basis. The major driver of revenue was the increase in the number of paid clicks. The number of paid clicks went up by 26% on a Y/Y basis easily making up for the 8% fall in the price/cost per click. The company also saw its Net Income margins improve by 3 percentage points.

The impact of a growing topline and improved margins was a higher than expected EPS growth. The company reported a non-GAAP EPS of $10.74, crushing analyst estimates of $10.37. The GAAP EPS was reported at $8.47, up 26% on Y/Y basis.

The one major negative for the quarter was the fall in revenues of the hardware division. However the silverlining was the hardware division's revenues increasing for the first time on a quarterly basis. The future performance of the hardware division will be keenly followed by Google Investors as a possible turnaround of the division will lead to better margins for the company and contribute significantly to the topline.

The positive market response to the earnings call was reflected in the 8% jump in Google stock price in after-hours trade immediately following the earnings call. The stock opened today’s trading session at a price of $980.23, an overall increase of over 10% from the previous closing price. The stock has been among our stock picks for close to 5 months now and our faith in the company has paid off in the form of a 10% gain since our last coverage of the stock on September 16. Do follow us for our take on the happenings in the ‘Internet’ sector.

To see Google's current price, please click here: (NASDAQ: GOOG)


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