Google misses slightly on fourth quarter earnings and stock dips

Google’s fourth quarter earnings missed Wall Street expectations today, but only by a slight amount. The stock dipped down 3 percent in after hours trading.

Here are the Q4 numbers:

Revenue minus traffic acquisition costs (TAC):

Analysts expected — $14.61 billion

Google actual — $14.48 billion

Earnings per share (Non-GAAP):

Analysts expected — $7.08

Google actual — $6.88

Cost per click:

On Google.com — Decreased 8 percent in Q4

On Google’s network sites — Increased 6 percent in Q4

As The Information’s Amir Efrati pointed out on Twitter, you can see Google’s true opinion of its fourth quarter earnings by comparing its press releases from former earnings reports. This is the first quarter in a year that Google hasn’t heralded its “strong” and “great” “momentum” and “growth.”

During the earnings call, Google’s CFO Patrick Pichette confirmed that the company has halted its Google Glass project. He explained that Google will pause future projects and reset their strategy when they aren’t having the impact hoped for. This is a change in messaging from the company’s earlier line that Glass was just “graduating” to a new stage of development.

Google also discussed its Chromecast stick, saying it has seen 1 billion cast sessions since the company started selling it. Despite the bullshit metric — number of units sold would’ve been a better number — Chromecast is clearly doing better than Glass.

This story has been updated with information from the earnings call.

Here’s why Facebook got away with a 335 percent hike in ad prices

Ads dominated the discussion during Facebook’s fourth quarter earnings call this Wednesday. COO Sheryl Sandberg told analysts that the company is charging 335 percent more for each ad on average, despite the fact that the ad impressions has decreased by 65 percent.

The company says its ads have become more efficient at targeting and tracking people. Facebook is measuring the return on investment that each advertiser receives for every dollar spent. “When I sit down with clients this year compared to last year … we’re able to A/B test Facebook ads versus no Facebook ads and what the effect is on their sales,” Sandberg said on the call.

She repeated Facebook’s new advertising mantra, a tactic it’s calling “people based marketing.” The company is building new ways to measure a user across multiple devices, like phone, desktop, laptop, and tablets, instead of relying on cookies, which don’t work well on mobile.

“The ability to understand that that’s one person, to serve an ad and measure through all the way, we think is going to massively improve the efficiency of the system,” Sandberg said.

She’s not the only one who thinks that. On Google’s earnings call last quarter the company admitted it was keeping an eye on Facebook’s innovations in the mobile advertising space. At the time, analysts were concerned that Google didn’t have enough visibility in the app ecosystem, via Gmail logins, to track users across their apps and target the best ads to them.

Since many apps have integrated Facebook login technology, the company is the leader in targeted advertising for mobile. 69 percent of Facebook’s advertising revenue came from mobile in Q4, 16 percent more than in the same quarter of 2013. It’s staggering growth, given it was only two years ago it was struggling to figure out how to make money on mobile.

As for the rest of Facebook’s Q4 numbers, the company beat Wall Street estimates for the tenth quarter in a row. Its growth continues unabated and it surpassed its number of monthly active users from Q3 by 40 million.

Here are the Q4 numbers:

Revenue:

Analysts expected — $3.77 billion

Facebook actual — $3.81 billion

Earnings per share (non gaap):

Analysts expected — $0.48

Facebook actual — $0.54

Monthly active users:

3rd quarter 2014: 1.35 billion

This quarter: 1.39 billion

Other significant stats:

3 billion video views per day

890 million daily active users in December

1.19 billion monthly active mobile users

The company’s continued success comes on the heels of positive news about its social acquisitions and messaging efforts. As Kevin Fitchard reported this morning, Facebook owns the top four most downloaded apps worldwide in 2014: WhatsApp, Instagram, Facebook itself, and Facebook Messenger.

Facebook’s attempts at building new social apps haven’t succeeded quite as well — Poke was quietly shuttered, and Slingshot and Rooms have been laying low. But Zuckerberg’s lavish acquisition strategy, although occasionally jaw-dropping, appears to be working. Instagram is now believed to be worth $35 billion compared to the $1 billion Facebook bought it for.

This post has been updated with more information from Facebook’s earnings call.

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Yahoo stock rises as it turns Alibaba investment into separate company

Yahoo is splitting its remaining Alibaba shares into a separate company called SpinCo. The move will help Yahoo avoid the tax pitfalls of the investment.

The news came Tuesday as Yahoo reported its fourth quarter earnings. In after hours trading, Yahoo’s stock price increased as much as seven percent. Investors clearly approve of the plan for the cash.

The presentation deck for the plan explained that part of the goal of spinning off the Alibaba investment is to provide transparency for investors into Yahoo’s core business. SpinCo will still be answerable to Yahoo shareholders. Take a look at the full deck here. This image visualizes the split:

Page 4 from the Yahoo deck on its Alibaba investment split off

Page 4 from the Yahoo deck on its Alibaba investment split off

In terms of its fourth quarter earnings, Yahoo met expectations. Here’s the numbers:

Revenue

Earnings per share

On the earnings call, CEO Marissa Mayer emphasized the split between Yahoo’s core business and its new mobile, video, native, and social efforts which she deemed “MaVeNS.” She went so far as to insult Yahoo’s previously mobile efforts, prior to her arrival, calling it a “confused, web-based mobile strategy” compared to the company’s current “beautiful, native strategy.”

The MaVeNS properties brought in over a billion dollars in 2014, leading Mayer to conclude the company earned that revenue “basically from nothing in just two years.”

At the end of the call, she hinted that the company might build or acquire more messaging or communication applications because it builds on the company’s native, social and email strengths.

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This story has been updated since publishing with information from the earnings call.