Why Google Should Spend Profits Somewhere?

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‘Google’ profits better spent elsewhere, Shiyuan Chen, z3416168, Wed 4-5, Maverick

In 1997, Sergey Brin and Larry Page registered Google.com as a domain (Google.com, 2014) and conquered the market share of search engines, however Google was not earning profit. In order to continue growth and maintain the vision of ‘providing vast information to users without charging’ at the same time Brin and Page finally considered associations with marketing and advertising. Google started to offer entertainment and news for free while charging for standardized advertising (Hartley, 2014). Up to 2014, Google has become the label of a multinational cooperation with more than $500 per share price (NASDAQ.com, 2014), providing a variety of splendid
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Google’s growth rate of its core operation has been slowed since the end of 2008 (Vascellaro, 2014), its worldwide market share as a leading search engine also dropped from 91.7% in July 2012 to 88.15% in July 2014 (Statista, 2014).

Google’s announcement released this month suggests a net profit of $13.17 billion, adjusted earning per share of $6.35 over the last quarter. However this still fall short of Wall Street’s forecast of $6.53 per share and net profit of $13.22 billion. After this announcement, Google’s shares dropped approximately 3% immediately (Financial Review, 2014). Although its long-term rising trend remains unchanged, it seems important for such giant cooperation to keep up with the expected growth rate always.

According to the statistics (Peterson, 2014), Google’s advertising revenue has been increased (by 17%) to $14.7 billion from the first quarter of 2011 to the third quarter of 2014, and pushes the company’s total revenue (by 20%) to $16.5 billion over last year. However the net income has not shown much growth, because the average price advertiser pay Google for each click fell by 2% in the third quarter although the number of clicks rose by 17%. Average cost-per-click increased compared to prior year, while paid clicks decrease. This is because more people are in touch wth advertisements on smartphones and tablets but advertisers are unwilling to pay as much for advertising on these platforms as they do
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