Google shares slide after results miss expectations

Revenue and earnings were up, but price per click continues to fall

In Google’s first earnings report since shucking Motorola in January, the company has posted less than spectacular results that fell just a hair’s breadth short of analyst expectations.

Revenue came in at $15.42 billion, which marks a 19% increase over Q1 2013. Non-GAAP income came in at $4.3 billion, or $6.27 a share, compared to $4.04 billion or $6 a share in Q1 2013. That’s just a smidge below the $6.36 on revenue of $15.75 billion that analysts were expecting.

In terms of Google’s core business, paid clicks were up 26% over Q1 2013, but cost per click was down 9% year-over-year. This seems to reaffirm investors’ fears that Google ads aren’t catching the mobile crowd. While Twitter and Facebook have pretty much adapted to the rise in mobile usage, Google has had more of a struggle.

Chief Business Officer Nikesh Arora assured investors that mobile will become a more important source of ad revenue for Google—and will even become profitable.

"A whole bunch of building blocks have to come into play," he said during the earnings call. "That journey is just beginning on the mobile side."

Shares dipped 2.49% in after-hours trading to $542.70.

Traffic acquisition costs came in at $3.23 billion or 23% of Google’s total revenue, compared to 24.9% in Q1 2013.

The company’s “net loss from discontinued operations”—aka the shucking of Motorola—totaled $198 million for the first quarter. That’s compared to $182 million for Q1 2013.

Google sold Motorola to Lenovo in January for $2.9 billion just two years after buying the flailing mobile company for $12.5 billion.

"We completed another great quarter. Google's revenue was $15.4 billion, up 19% year on year," said Google CEO Larry Page in a statement that might be the very first time he didn’t use the phrase “super excited”. "We got lots of product improvements done, especially on mobile. I'm also excited with progress on our emerging businesses."

Other emerging businesses like...Google Glass, which became available yesterday for one day--AND ONE DAY ONLY--to the general public (which I feel is like how Disney doesn't have any of its movies available to rent or buy online or as DVDs, and then they announce one day that for a limited time only, you can get Peter Pan on DVD or Blu-Ray, so everyone runs out and buys it even though they don't even like Peter Pan). Even though the devices were priced at $1,500 a pop, Google still sold out in some 15 hours.