Google's Outsized Ad Growth Offsets Steep Price Decline

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Google's outsized ad growth offsets steep price decline
David Paul Morris/Bloomberg via Getty Images
By Alexei Oreskovic

SAN FRANCISCO - Google's quarterly revenue beat Wall Street's target despite an ongoing decline in prices for its online ads and deepening losses at Motorola, the handset-making division to be sold to China's Lenovo.

Shares of Google (GOOG), which have risen more than 20 percent in the past three months, rose nearly 4 percent to $1,178 in after-hours trading Thursday.

Google executives said in a conference call Thursday that the company benefited from strong demand from brand marketers and retailers in the fourth quarter, as well as healthy demand for online ads in international markets.

"In the holiday season one thing has become very clear, the Web has truly become the new holiday store window," Google Chief Business Officer Nikesh Arora said.

Paid clicks on Google's online ads jumped 31 percent during the typically busy holiday quarter, but the average cost per click that marketers paid the company slid 11 percent.

Google's advertising rates, %VIRTUAL-article-sponsoredlinks%like those of other Internet companies including Yahoo (YHOO), has been under pressure as more consumers access its online services on mobile devices such as smartphones and tablets, where advertising rates are lower than on PCs.

Motorola, which Google has agreed to sell to China's top PC maker for $2.91 billion, saw operating losses of $384 million in the quarter, more than double the $152 million loss from a year earlier.

The Internet search giant has struggled to turn the unit around in the face of steep competition from Apple Inc, and the sale of the loss-making unit is considered a positive for Google.

Google's consolidated revenue, which includes the money-losing Motorola smartphone business, rose to $16.86 billion from $14.42 billion in the fourth quarter of 2012. Analysts polled by Thomson Reuters I/B/E/S were looking for $16.75 billion.

Revenue in Google's core Internet business totaled $15.7 billion in the last three months of the year, up 22 percent from the $12.91 billion in the year-ago period.

Google's consolidated net income was $3.38 billion, or $9.90 a share, compared to $2.89 billion, or $8.62 a share, in the year-ago period. Excluding certain items, Google said it earned $12.01 a share, below analyst expectations for about $12.20.

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Tech's Highest-Paid CEOs
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Google's Outsized Ad Growth Offsets Steep Price Decline
Company: Oracle
Cash compensation: $5.5 million
Stock and options: $90.7 million
Total compensation 1-year change: 24%

Despite his $1 salary, Ellison is not only the highest paid tech CEO this year, but the highest paid of all CEOs.
Most of Ellison's pay comes from his stock grants. In June of 2011 he was given an option to purchase 7 million shares of Oracle (ORCL) common stock.
Company: Yahoo
Cash compensation: $1.6 million
Stock and options: $35 million
Total compensation 1-year change: N/A

Mayer left Google (GOOG) to join Yahoo (YHOO) as its CEO, president and a board member in July of 2012. Her base salary was set at $1 million with an annual bonus target set at $2 million a year.
Though she only took home $6 million last year, Mayer reached No. 2 on this list because she was also offered a one-time retention award when she was hired, consisting of stock grants that could total $30 million when they vest over the next five years.
Company: eBay
Cash compensation: $4 million
Stock and options: $25.7 million
Total compensation 1-year change: 81%

The 81% jump in in Donahoe's salary this year is largely due to a one-time award of about $14.9 million paid in stock. According to a regulatory filing, Donahoe got the grant because he led eBay (EBAY) "successfully through a difficult turnaround ... and positioned it well for additional growth."
Company: Salesforce.com
Cash compensation: $3.2 million
Stock and options: $18.9 million
Total compensation 1-year change: 25%

Benioff's base salary has been set at $1 million for the past two years. He received a $1.3 million cash bonus last year and almost $19 million in Salesforce.com (CRM) stock options and awards. He also received $650,000 to cover costs related to his personal security, which is "of paramount importance to the company," according to a regulatory filing.
Company: AT&T
Cash compensation: $8.4 million
Stock and options: $12.6 million
Total compensation 1-year change: 12%

Stephenson, who has served as CEO and president of AT&T (T) since 2007, was paid a $6 million bonus on top of his $1.6 million base salary in 2012. About $13 million of his pay came in the form of stock and awards.
Company: Qualcomm
Cash compensation: $5.7 million
Stock and options: $15 million
Total compensation 1-year change: -5%


Jacobs was given a $3.4 million cash bonus on top of his $1.2 million salary. Other compensation for the CEO included more than $280,000 for personal use of Qualcomm's (QCOM) corporate aircraft and more than $4,000 for things such as home office costs, personal travel and entertainment.

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