(By Balaseshan) Search engine giant Google Inc. (NASDAQ: GOOG) reported a 20.3 percent drop in quarterly earnings due to employee stock compensation and restructuring charges related to the acquisition of Motorola.
Google, which has been struggling to turn around its Motorola acquisition, surprised investors by reporting results early in a regulatory filing. The company's third quarter results missed the Street's expectations for the first time in the preceding four quarters.
Profit plunged 20.3 percent to $2.18 billion, while earnings per share (EPS) dropped 21.6 percent to $6.53. Adjusted earnings fell to $3.01 billion, or $9.03 per share, from $3.18 billion, or $9.72 per share.
Revenue climbed 45 percent to $14.101 billion. Excluding traffic acquisition costs, revenue rose to $11.33 billion from $7.51 billion.
Analysts, on average, polled by Thomson Reuters had expected a profit of $10.65 per share on revenue of $11.86 billion for the third quarter.
The search giant's earnings have managed to top the Street view thrice in the preceding four quarters. The consensus estimate has dropped from $10.77 to Tuesday's estimate of $10.54 within the last three months.
Excluding gains related to foreign exchange risk management program, total revenue in the latest quarter would have been $557 million higher.
Motorola revenues were $2.58 billion ($1.78 billion from the mobile segment and $797 million from the home segment), or 18 percent of consolidated revenues in the third quarter of 2012.
Google-owned sites generated revenue grew 15 percent to $7.73 billion, while Google's partner sites revenue increased 21 percent to $3.13 billion. Revenues from outside of the United States totaled $6.11 billion, representing 53 percent of total revenue in the latest quarter.
Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of network members, increased about 33 percent, while average cost-per-click, which includes clicks related to ads served on Google sites and the sites of network members, decreased about 15 percent.
Total costs and expenses increased to $11.37 billion from $6.66 billion. Google's cost of revenue rose to $4.44 billion from $3.38 billion, while Motorola's cost of revenue was $2.11 billion for the latest quarter.
On a worldwide basis, Google employed 53,546 full-time employees (36,118 in the Google business and 17,428 in its Motorola business) as of September 30, 2012, compared with 54,604 full-time employees as of June 30, 2012.
Meanwhile, software major Microsoft Corp. (NASDAQ: MSFT) is set to release its first quarter results after the market closes Thursday. Street analysts are expecting Microsoft to earn $0.56 per share on revenue of $16.42 billion. In comparison, last year's reported earnings were $0.68 on revenue of $17.37 billion.
GOOG is trading down 9.01 percent at $687.39 on Thursday. The stock has been trading between $556.52 and $774.38 for the past 52 weeks.