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Google's Financial Success: Is It That Surprising?

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Google, the mega search engine, apparently internet's most used web page is always creating one news or the other. We also know that by optimizing the ad business on search pages as well as on mobiles, Google remains a highly valued company, yet the news that Google revenue has touched $50 billion came as a bit of surprise for many. It is intriguing that contrary to the expectations of analysts, Google has shown the way that even in a market that has been recessing and even when it took the risk of going mobile, which obviously reduces its per click revenue, it still continues to raise its profits. Something at Google is obviously working, which many analysts did not understand, therefore the element of surprise.

Before the last quarter financial results were announced, Google revenues were expected to be somewhat sombre. According to Financial Trading Google Inc. puts the revenue push to $14.4 billion, which is a substantial jump from revenue last year. The net profits for Google the last quarter of the year 2012 was $ 2.89 billion.

As reported in Bloomberg one of the analysts at Macquarie Securities USA Inc., Benjamin Schechter, is waving green for buying the Google stock. He also suggests that although it is still a transitional phase moving to mobile ads, but the numbers show that Google is handling the process pretty well. It is not for nothing that Google share rose 5.5%, which is biggest ever gain for the internet giant since October, 2011.

Larry Page, CEO of Google seem content with his profit making quarter as he said "We ended 2012 with a strong quarter. I am incredibly optimistic about the opportunities we have as a technology company focused on user benefits" revealed sources in Bloomberg.

It would be noteworthy to mention that Google remains a leader in search, which is its core business. It has 67% of the market in the U.S while Microsoft has 16 and Yahoo has 12 per cent share. In addition to that Google is experimenting with Google Wallet and other products that may feed into its revenue directly.

While the answer to the rising profits in the last quarter is because the advertisers pushed for more and more visibility in the holiday season during the year end and before. However, such an ad spending should be a norm rather than an anomaly.

E Commerce spending in US in the holiday season went up by 14 per cent which may have even compensated for the reduced per click revenue on mobile platform. Pushing Android as a strategy to help gain access to user data globally, is also working for Google. Android currently has 72% per cent of the smartphone market as per Gartner.

To sum up, Google still reigns the search big time, the Android is a dominant force in the market and people are still hooked on to Google for everything from finding a location, to finding a recipe or finding any information whatsoever. Big internet companies anyway were not really the victims of recession, be it Apple, Microsoft or Google. How, then analysts have shown all that surprise at Google financials is a little bit off the mark. Google has made deep paths in the way people look for information and it is not any time soon that it is going to change. Besides, Google has shown that even by taking the risk of reduced revenues, smart phone users should get used to Google than anything else. Once again, Google has proven the fact that if you don't cannibalize your own sales, someone else will.