Google revenue hits $14.42B in fourth quarter, up 36 percent

Google beat analyst expectations by reporting $14.42 billion in revenue for the fourth quarter of 2012, up 36 percent from the previous year, giving Google its first-ever $50 billion year.

"Not a bad achievement in just a decade and a half," Google CEO Larry Page said in a statement. "In today's multi-screen world we face tremendous opportunities as a technology company focused on user benefit. It's an incredibly exciting time to be at Google."

Google generated revenues of $50.18 billion in 2012, up from $37.91 billion in 2011. 

Excluding restructuring charges and losses from discontinued operations, the company reported net income of $3.57 billion in the quarter, up from $3.11 billion a year ago. Figured according to generally accepted accounting principles (GAAP), Google reported net income of $2.89 billion for the quarter, up from $2.71 billion a year earlier.

Google shares rose $27, or almost 4 percent, in after-hours trading. 

Cost per click, which measures how much advertisers are willing to pay for the traffic Google sends to them, increased 2 percent over the previous quarter, but was down 6 percent from the previous year. A key measure of Google's core advertising business, the decline in cost per clicks indicates challenges presented by the rapid adoption of Android software around the globe. More than 1 million Android devices are activated a day, but searches on those devices are more difficult to profit from because of various difficulties inherent in mobile shopping. As a result, costs per click have now declined for five consecutive quarters.

"While the growth in paid clicks has compensated for the decline in price, it is worth watching closely how the dynamic of supply growth impacts pricing as mobile monetization remains a laggard," wrote Colin W. Gillis, an analyst at BGC Partners, in an earnings forecast.

Asked about cost per clicks, or CPCs, Page expressed optimism.

"I focus mostly on our products and assume usage will follow great products," Page said today in an earnings call. "CPCs will improve as these devices are improving."

Analysts had expected Google to earn $10.49 a share on $12.3 billion in revenue, according to a poll done by Thomson Reuters. Last year Google earned $9.50 a share on $8.13 billion in revenue, but those numbers did not include Motorola.

Google had warned analysts that their estimates might be too high, because many of their forecasts appeared to include results from Motorola Home. Google sold Motorola Home to Arris last month for $2.3 billion. Google will report Motorola Home revenues as a separate line item in its 2012 consolidated report, according to a rare note from Google's chief accountant.

Google's revenues would have been $15.24 billion had Motorola Home been included, the company said.

Vacation planning

In the earnings call, Page weighed in on how Google might eventually help a user plan an entire vacation. He has previously talked about creating the ultimate travel planning app on Google, delivering "answers" instead of a set of relevant links.

Page told Fortune: "It would be really nice to have a system that could basically vacation plan for you. It would know your preferences, it would know the weather, it would know the prices of airline tickets, the hotel prices, understand logistics, combine all those things into one experience. And that's kind of how we think about search."

During today's earnings conference call, Page offered a bit more of his thinking on moving from links to answers.

"We've always done a good job sending people to the right places," Page said. He stated that answering complex queries, such as planning a vacation trip end-to-end with flights, hotels and activities, doesn't necessarily mean Google wouldn't send people off site: "We still might want other parties to do a transaction."

He also said that Google has the "assets in travel and in mapping that will provide great experience in the future."

"We are trying to be practical about it," he said, noting Google is acquiring companies, working with others and making deals to build "great customer experiences."

"Google has an aspiration to do that for any area, not just travel, and we are working with as many companies as we can to organize the world's information," Page said.

Other earnings highlights:

• The company has $48.1 billion in cash and cash equivalents on hand. 
• Google's head count keeps rising: The company had 53,861 full time employees -- 37,544 for Google, 11,113 for Motorola Mobile and 5,204 for Motorola Home. That's up from 53,546 employees in September 2012.
• International revenues made up 54 percent of Google revenues in the fourth quarter of 2012, compared to 53 percent in the previous quarter and 53 percent in the fourth quarter of 2011. 
• Motorola Mobile continues to lose money for Google. The division lost $152 million in the fourth quarter.