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Google sales beat but stumbles

Thursday, Jan 30, 2014 - 02:23

Jan. 30 - Google's fourth-quarter revenues were better-than-expected thanks to faster sales growth in its core web business, but sales at lagged forecasts during a fierce battle for holiday shopping dollars. Conway G. Gittens reports.

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Two internet giants, two different set of results. missed sales and profit forecasts for the crucial fourth quarter. The leading online retailer had to fight for every dollar in the most competitive holiday shopping season since the great recession. And while sales in North America held up, it was the international side of the business which did not live up to lofty expectations. To make matters worse, the company is forecasting a loss this quarter. Investors were quick to push the sell button after watching the stock soar nearly 60 percent last year. Some analysts say time is running out for Amazon to start showing better profits, but Max Wolff of ZT Capital disagrees, noting Amazon's cloud business for one. SOUNDBITE: MAX WOLFF, CHIEF ECONOMIST AND STRATEGIST, ZT WEALTH (ENGLISH) SAYING: "I do think they are going to keep getting a pass because of Amazon Web Services, because of their desktop replication, getting into China. And they basically - they control e-commerce to the extent that we haven't seen a single brand name control retail in decades. So they are all about the future. But they do have to do something for shareholders now. And when they come up short, which they did a little bit today, they certainly get punished massively in the short term." It was a different story at Google. Revenues at the Internet search giant coming in ahead of the consensus. Sales in its core business up more than 20 percent for the second straight quarter, but it wasn't easy. Paid clicks for advertisers were way up, but advertisers paid way less. That adds up to profits that were weaker than hoped. SOUNDBITE: MAX WOLFF, CHIEF ECONOMIST AND STRATEGIST, ZT WEALTH (ENGLISH) SAYING: "It continues to control search. It continues to be the world's dominating mobile operating system. It continues to be able to sell ads. The truth is mobile ads are cheaper. You have to serve a lot of them. And it isn't clear how effective they are. That does hurt the margin." Also hurting the bottom line - Motorola Mobility - but the company already announced it is ditching the handset business to Lenovo for $3 billion. So investors are focusing more on those sales figures, tacking on to the near 60 percent bounce in the stock last year. STAND-UP: CONWAY G. GITTENS, REUTERS REPORTER (ENGLISH) SAYING: "But the technology sector is no longer the growth engine it used to be. Earnings growth for tech companies in the S&P 500 reporting so far have been anemic compared to others; only utilities and consumer staples posting slower growth, with the energy sector showing no growth at all, according to data compiled by Thomson Reuters I/B/E/S." Focus now turns to Twitter next week, when it puts out its first quarterly scorecard since going public.

Google sales beat but stumbles

Thursday, Jan 30, 2014 - 02:23

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