Financial Analysis : Google 's Profit Essay
In 2013, Google’s earnings trounced all analyst’s expectations as fourth quarter revenue rose to $16.86 billion, which was 17 percent higher than 2012 (Rosenblatt, 2014). The operating income also rose, which increased from $4.27 billion to $4.84 billion (Rosenblatt, 2014). The earnings per share expectation from most analysts were higher than reality, however, the compa-ny’s final earnings per share of $12.01 was higher than the $10.65 a year earlier (Rosenblatt, 2014).
For Google, the past several years have shown consecutive years that the total revenue crossed $50 billion. For example, in 2013 it reached $57.86 billion, and in 2012 it was $50.18 billion (Rosenblatt, 2014). The total revenue included revenue from the company’s main focus of advertising, and this included Traffic Acquisition Costs (TAC), Average Cost-Per-Click (CPC), and Aggregate Paid Clicks.
TAC, which Google must pay to its partners, jumped to $3.31 billion in the fourth quarter of 2013, compared with $3.08 billion in same period the year before (BGR, 2014). However, TAC as a percentage of advertising revenue saw no increase and remained the same from 2012 to 2013. Additionally, TAC was split between network members, distribution partners, and others who help with driving traffic to Google.
CPC on the other hand decreased, making it the seventh or eighth quarter in a row that CPCs were down. However, even with the decrease, the company improved its hardware num-bers and better…