Chromecast, Google Play highlight strong quarter for Google

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The numbers may have fallen short of analysts’ rosy estimates, but Google’s quarterly sales increased yet again in the first quarter of 2014. Revenue hit $15.42 billion for the quarter ended March 31, the company announced in a Wednesday earnings call, with earnings hitting $6.27 per share.

That’s a 19 percent jump from the $12.95 billion in revenue earned in the first quarter of 2013, but it’s less than the $15.52 billion in revenue and $6.42-per-share earnings that analysts had predicted, which was enough to send the stock sliding a few percentage points during after-hours trading.

Google had a big quarter, selling Motorola to Lenovo as well as paying $3.2 billion to snap up Nest. The company spent about $500 million more in R&D than it did in the same quarter last year, increasing that budget item to about 14 percent of its overall revenue.

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Debuting in July 2013, the Chromecast is a strong seller, although Google didn’t release exact sales figures for the device.

Among the bright spots specifically mentioned in the call was strong Chromecast sales. The $35 dongle went on sale in 11 more countries last month, and within a few weeks of releasing the SDK, Google signed up more than 3,000 developers interested in adding support to their apps and websites. Another strong performer was the Google Play store—“We’re really delighted by the Play business,” said senior vice president and chief financial officer Patrick Pichette. Movie sales and rentals expanded to 39 new countries, and Google paid out 4 times the cash to app developers in 2013 than it did in 2012.

Still, the company’s bread-and-butter continues to be advertising, and the first quarter saw aggregate paid clicks increase 26 percent over Q1 2013. The cost-per-click (or how much Google makes from each click) decreased 9 percent in the same period, although it remained relatively flat from last year’s fourth quarter.

Aside from desktop and mobile ads, Google is in a good position to help advertisers build their brands in the digital space. For example, every Super Bowl ad was on YouTube, explained Nikesh Arora, senior vice president and chief business officer. Those ads were viewed 300 million times, which is nearly three times as many viewers as watched the Super Bowl on TV—and that game (boring as it was) set a record for being the most-watched TV event in U.S. history.

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Google’s executives are bullish on the potential of Android Wear.

Going forward, Google is excited about the potential of Android Wear, continued growth for Chromecast, as well as Google Fiber. The company is working with 34 muncipalities that are excited about getting Fiber, to make sure the conditions are right to move on to the build stage. “Everyone in the industry is talking about the gig,” meaning the blazing 1Gbps speeds, said Pichette. “So we’re really excited to work with these communities.” To improve its ad business, Google is working on helping advertisers track online-to-offline conversions, as well as improving its Enhanced Campaigns program, which bundles desktop and mobile ad campaigns, to bring up the cost-per-click figure.

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