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Google profits dip

October 17, 2014

Internet search giant Google has released its third-quarter earnings. It's a mixed picture of lower profits and growth but slowing declines in ad prices and greater investment in research - and markets are unconvinced.

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Google logo (Photo: REUTERS/Mike Blake/Files)
Image: Reuters

Internet giant Google on Thursday reported a slight drop in third-quarter net income on sales that increased around 20 percent.

The search engine's reported net income of 2.81 billion dollars (2.20 billion euros) came in below market expectations. It was down from 2.97 billion in the same period last year.

The company's shares dipped by as much as 5 percent in extended trading.

Describing the company's performance as "strong," CFO Patrick Pichette said "We continue to be excited about the growth in our advertising and emerging businesses."

Despite the strong sales growth, the 17-percent increase in paid clicks was down from last year's 25 percent, sparking investor fears that the firm's lucrative online advertising business was maturing. But average ad prices dropped by just 2 percent, the smallest drop in three years.

Earnings were hit by a 378-million-dollar charge related to patent royalties the firm took on when it bought handset maker Motorola Mobility in 2012. Google is now selling Motorola to China's Lenovo.

The Mountain View, California-based company continues to support large R&D efforts that cut into short-term profits. It hired 3,000 new staff over the quarter, nearly twice as many as in third-quarter 2013.

Google hopes that by investing in a diverse range of products - which its CEO Larry Page calls "moon shots" - it will be able to develop new technologies and markets that will maintain its technological lead. The company's Android mobile operating system, Chrome web browser, and online services such as Gmail and Google Maps were the result of such efforts.

sgb/uhe (AFP,AP)