Google Q3 profit, revenue fall short of estimates

Google Inc fell short of profit and revenue estimates for the third quarter as the search company pushed up spending to reignite slowing advertising sales, Bloomberg reported.

Profit, excluding some items, stood at $6.35 a share, the company said in a statement yesterday, which came in short of analysts' average projection for $6.53.

Revenue, excluding sales passed on to partners, stood at $13.2 billion, just shy of analysts' prediction, estimates compiled by Bloomberg showed.

Chief executive officer Larry Page, seeking new opportunities beyond desktop-based search ads, is increasing investments in everything from business software to mobile services.

Revenue at Google's own websites was up 20 per cent, as against 23 per cent in the prior period.

The company, at the same time increased hiring and boosted research and development spending by almost 50 per cent.

According to Ben Schachter, an analyst at Macquarie Securities USA Inc, "the trend lines were OK but growth was certainly slowing".

He added, the company was spending a lot to get the talent that it had, Bloomberg reported. He said what needed to happen was the company needed to start to seeing some of the non-traditional areas contribute more to Google results.

Meanwhile, The New York Times said even as the Mountain View company's revenue for the third quarter was up 20 per cent from the third quarter over the same period last year, the cost per click - the average price the company was paid each time a user clicked an ad - was down 2 per cent as against the quarter a year ago, and was flat from the second quarter.

The cost-per-click measurement had been falling for several years as people spent more time with mobile phones, which had smaller screens and were harder to place ads on.

The internet search company does not release figures for mobile ad revenue separately from desktop ad revenue.

Paid clicks on advertisements were up 17 per cent in the quarter as against a year ago and 2 per cent from the second quarter.

However, in the second quarter, the increase was 25 per cent and the rate of increase in the important metric was slowing.

That was a concern for investors because even though Google had expanded beyond its core search business, that beat everything else on profitability.

According to Jordan Rohan, founder at Clearmeadow Partners, a strategic advisory firm focused on internet companies, Google's core search business was the best internet business model ever created. He added every other business Google was in looked pedestrian by comparison.