Google earns $2.79 billion in Q2, stock bumps up after hours

Following the closure of the Motorola Mobility deal, Google did pretty well for the second quarter of 2012.

The Internet giant reported second quarter earnings of $2.79 billion, or $8.42 a share, on revenue of $9.61 billion excluding traffic acquisition costs. Non-GAAP earnings came in at $10.12 a share (statement).

Including traffic acquisition costs Google revenue for the quarter was $12.21 billion. TAC totaled $2.60 billion.

Wall Street was looking for second quarter earnings of $10.04 a share on revenue of $8.41 billion, excluding traffic acquisition costs.

Google shares were up by approximately 4 percent nearly immediately after the announcement was released.

CEO Larry Page commented in prepared remarks:

Google standalone had a strong quarter with 21% year-on-year revenue growth, and we launched a bunch of exciting new products at I/O - in particular the Nexus 7 tablet, which has received rave reviews. This quarter is also special because Motorola is now part of the Google family, and we're excited about the potential to build great devices for users.

The earnings announcement was also a unique situation this time as it was the first quarter following the consolidation of Motorola Mobility. Ahead of the earnings announcement, most analysts expressed concern about Google's future in hardware.

Wells Fargo analysts cited that "the big question for Google is the strategy around selling hardware (both Nexus & MMI)."

They can pursue many different paths (share, margins, subsidies) that will have varying short and long-term financial ramifications. We think Google needs to find their strategy given Apple's strength and Amazon's plan to use commerce to subsidize tablets (perhaps phones as well). Google has said that Motorola will be run as a separate business and will remain a licensee of Android.

Oppenheimer acknowledged that Motorola has "been an overhang," and that they expect investors "have taken a wait-and-see approach ahead of 2Q." Nevertheless, Oppenheimer analysts argued that the "negative impact of mobile" has been hyped up, and the primary causes of the revenue slowdown have more to do with "macro, geographic mix, and quality improvements."

For the outlook, Google didn't provide guidance, but Wall Street is expecting third quarter earnings of $10.76 a share on revenue of $9 billion.

By the numbers:

• Google-owned sites generated revenues of $7.54 billion, or 69 percent of Google revenues for Q2.
• Google's partner sites generated revenues of $2.98 billion, or 27 percent of Google revenues for Q2.
• Google revenues from outside of the United States remained consistent (from both Q2 2011 and Q1 2012) at 54 percent.
• Aggregate paid clicks increased by 42 percent over Q2 2011.
• Google employed 54,604 full-time employees worldwide as of June 30 -- compared to 33,077 full-time employees as of March 31.

This item first appeared on ZDNet's Between the Lines blog under the headline "Google's strong Q2 earnings send stock up after hours."