Google’s Q4 2013 profits miss, shares still up; Motorola lost $384 million

Google reported its earnings today for Q4 2013. Wall Street expected Google to hit $16.75 billion in revenue and earnings of $12.26 a share, and Google hit revenue estimates with 16.86 billion in revenue but missed earnings with $10.47 a share. The profit miss didn’t seem to matter to investors, as shares were up slightly in after-hours trading.

Google’s segment revenue (not counting Motorola) was up 22 percent from last year. Google only breaks revenue down into 3 segments: “Google Sites,” “Network Revenues,” and “Other Google Revenues,” and those segments account for 93 percent of Google’s revenue. “Google Sites” is the majority of the company’s income, which includes revenue from Google Search, YouTube, Gmail, and other Google-owned sites. This segment accounted for $10.55 billion, or 67 percent of total segment revenue, and was up 22 percent year over year. “Google Network Revenues” come from ads shown on non-Google sites—essentially Adsense. Network Revenues were $3.52 billion, or 23 percent of total segment revenue, and only grew 3 percent over last year. The big winner was “Other Google Revenues,” which is mainly Google Play app, media, and hardware sales. This segment only made $1.65 billion, or 10 percent of segment revenue, but it grew 99 percent year over year. Google specifically called out the Chromecast as a big success story of this group.

The numbers everyone is interested in pertain to the now-discarded Motorola, which lost $384 million for the quarter—$136 million more than last quarter. For the total year, Motorola burned through $1.245 billion worth of cash. The deal with Lenovo will take a while to close, so Google will still probably have to deal with Motorola for another quarter or two. When asked about the future of Google hardware on the earnings call, Nikesh Arora, Senior VP and Chief Business Officer at Google, said, “As you know from the Nest acquisition, and Glass, and wearables, we continue to innovate and we continue to be committed to hardware in areas that are enterprising, promising, new frontiers, and that’s what we’re focusing on.”

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