When Google bought Motorola Mobility in August, the deal was positioned as a patent acquisition: Motorola’s tech assets would help protect Google’s Android mobile operating system from being challenged in court.
But with Google’s Q2 2012 earnings showing the effect of the Motorola deal on Google’s revenues for the first time, it appears that the financial result of the deal will be to compensate for a dramatically slowing ad business at Google.
Yesterday, we noted that declining mobile ad prices are altering the quality of Google’s revenues, potentially in a way that might threaten the future growth of Google’s $10 billion per quarter ad business.
When you remove the $1.3 billion in Motorola revenues from the quarter, it turns out that Google’s sequential revenue growth was marginal indeed: Just 3 per cent.
Ex-Motorola, revenues only rose from $10.6 billion to $10.9 billion. With Motorola, sequential revenue growth was 15 per cent, to $12.2 billion.
This chart shows revenue growth at Google, in blue columns. The final right-hand column shows Q2 2012 without Motorola—look how unimpressive growth is at Google without Motorola.
The green line indicates sequential growth from the previous quarter. (The percentage growth line is slightly confusing: If it represented only ex-Motorola revenue, it would not have that big spike of 15 per cent in Q2 2012. Instead it would slope gently up from Q1 2012’s 1 per cent growth to Q2 2012’s 3 per cent growth—and remain far below Google’s previous growth rates.)
And here’s the explanation for that slowdown: declining cost-per-clicks …
Disclosure: The author owns two shares of Google stock.
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