James Gautrey Talks Google Inc (GOOG)’s Results and Acquisitions

Google Inc (NASDAQ:GOOG) reported second quarter earnings that although showed improvement from last year’s numbers, left a lot to be desired about the company especially its chances of surviving the rapid shift to mobile advertising. On CNBC, James Gautrey, a global specialist for the technology and telecoms sector at Schroder, discussed Google’s earnings and revealed why he thinks the company is interesting.

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Google Inc (NASDAQ:GOOG) reported 22 percent increase in revenue to $15.96 billion. The revenue also surpassed Wall Street projection of $15.6 billion for the quarter. Net income also increased by 6% on a year-over-year. Something that caught the attention of most investors was the decline in cost-per-click (CPC), which is the price that advertisers pay for each click on an ad. The decline was linked to the increased shift to mobile advertising, where ad formats are different from the way they are presented on the desktop.

Gautrey told CNBC that there is a problem when people start to focus on CPC when that is not a major thing to be worried about Google Inc (NASDAQ:GOOG). He said that the decline in CPC cannot be interpreted to mean Google’s struggle to monetize mobile.

“I think there is a danger that people focus too much on monetization in mobile. The CPC [...] has been a massive focus for the investors over the last couple of years. [...] Twenty-two percent [revenue growth] is incredibly healthy. [...]  I’m less concerned about the CPC focus that the market gets into,” remarked Gautrey.

Google Inc (NASDAQ:GOOG)’s trail of acquisitions has also been an issue of great concern among investors in recent times. The company appears to be investing in off-beat projects that some have worried whether they will pay a dividend someday. Gautrey agrees that Google’s acquisitions baffle many.

 “I think, with Google, the nature of their acquisitions tends to worry people. They are a little bit off-beat [...] and people struggle to make sense. If you look back the last 10 years, in the history of acquisitions they have actually done very well,” he said.

Disclosure: none

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