Google (NASDAQ:GOOGL) shares opened higher this morning and rightfully so. The world's leading search engine posted better-than-expected fourth-quarter results.
However, let's not assume that it's a perfect report. There are a few numbers that either need clarification or are worth heeding. Let's check them out.
- $14.42 billion: This is Google's revenue for the quarter, up a healthy 36% over the past year. Big G points out that it would have been $15.24 billion -- up an even better 44% -- if it included the Motorola Home division that it just unloaded. However, that doesn't mean that the $14.42 billion is organic. That still includes the balance of Motorola Mobility that wasn't on the books a year ago. Back out Motorola for a clearer picture, and Big G's revenue increased 22% to $12.91 billion. That's still a solid showing, but it's the more accurate snapshot.
- Negative 6%: Cost-per-click -- or the average amount that an advertiser plaid for a click-through lead on Google -- has fallen 6% over the past few year. The dot-com darling is able to make it up in volume. It generated a welcome 24% spike in clicks, but things could get interesting if this becomes an arms race. Baidu crushed Google in China a couple of years ago, and the online speedster has set its sights on the global marketplace. It's been tiptoeing into neighboring countries, and may be a global force sooner rather than later. Facebook (NASDAQ:FB) is an even bigger threat with last week's rollout of Graph Search. The leading social networking website's ability to scour through friends -- and friends of friends -- for relevant queries finds Facebook playing a game that no one else can play better. This new search function is going to make Facebook stickier, something Google doesn't need.
- $48.1 billion: Google closed out the quarter with more than $48 billion in cash and marketable securities, but it's not as easy as dividing that into the nearly 335 million diluted shares outstanding and pointing to a cash cushion more than $143 a share. A lot of that money has been earned overseas, and that's where it remains until Google is willing to take a big tax hit to repatriate those profits. Why do you think Google's effective tax rate this quarter was a mere 18%?
- $3.08 billion: As anyone that has come across non-Google sites wallpapered with Google-served ads, there's more to the company's business than populating its own website with ads. Just two-thirds of Google's revenue stems from its owned sites. A good chunk of the rest comes from revenue-sharing deals, and $3.08 billion is what Google shelled out in traffic acquisition costs. It's clearly worth it for Google. It expands its reach, and perhaps more importantly keeps Microsoft's Bing away. Big G truly is a one-stop solution for advertisers. However, traffic acquisition costs have climbed from 24% of Google's revenue to 25% over the past year. Mobile migration is a part of that, and investors will want to keep an eye on that metric in the future.
It all adds up to a solid report in the end, but it's important to pay attention to what individual numbers are telling investors about the world's leading online advertising company.