Boston, MA 07/23/2013 (wallstreetpr) – Shares of Google Inc., (NASDAQ:GOOG) plummeted 1.57% to close at $910.70 in its last trading session. Shares remained at the higher end of its 52-week price range of $589.18 to $928.00. Also, despite the company underperforming, shares were traded heavily, with 2.90 million shares exchanging hands as against an average volume of 2.44 million shares.
The fall in share price was explained by the Q2 results posted by the company. It reported an EPS of $9.56. However, this was way below the analyst’s estimates of $10.78.
However, it performed excellently on the revenue front, with a surge of 46.8%. Revenue for the quarter was $14.11 billion, but this too remained below the analysts estimates of $14.42 billion. So while the miss in revenue forecast was not by a larger percentage, Google missed the EPS estimates by a larger amount, meant that it was not able to effectively manage its operational and administrative costs. This has been acknowledged by the company too, with company CFO Patrick Pichette commenting about falling margins, and how he aims at increasing the returns per dollar invested in order to create wealth for shareholders in total. Also, the company has also seen a persistent fall on the cost per clicks. The price paid for Google’s advertising, CPCs, dropped 6% year over year for the second quarter.
However, with the rise of use in mobile applications, Google has come with a new advertising strategy, called enhanced campaign. This system will allow advertisers to launch advertising campaigns for both desktop and mobile devices. This would not only improve CPCs for the company, but also help fight against the death of the PC industry. Also, ad pricing is lower in mobile, meaning that the new system could lead to better pricing.
What has been worrying investors is Google’s commitment to make capital expenditures of significant volumes, despite such fiasco.
