Google's 4Q earnings rise 17% but ad rates fall

SAN FRANCISCO (AP) — Google’s fourth-quarter earnings rose 17 percent even though a long-running slump in its online ad prices deepened.

The performance announced Thursday indicates that Google is still struggling to close the gap between the rates for ads shown on mobile devices and those on personal computers.

Advertisers haven’t been willing to pay nearly as much to reach prospective customers on the smaller screens of smartphones and tablets, but Google Inc. has been tweaking its digital marketing system so mobile and PC ad campaigns are bundled together.

Google’s average ad price during the fourth quarter fell 11 percent from the previous year.

The company earned $3.4 billion, or $9.90 per share. That compares with $2.9 billion, or $8.62 per share, in the prior year. Revenue rose 17 percent to $16.9 billion.

On Wednesday, Google announced a deal to sell smartphone-maker Motorola Mobility to Lenovo Group for $2.91 billion. The deal will rid Google of a financial headache that has plagued the Internet company since buying Motorola Mobility in 2012. Motorola has lost nearly $2 billion since Google took over, while trimming its workforce from 20,000 to 3,800.

Additionally, Google is finally ready to split its stock for the first time, more than three years after co-founders Larry Page and Sergey Brin began discussing a move engineered to ensure they remain in control of the Internet’s most powerful company.

The split is scheduled to occur April 2. It had been delayed because of staunch resistance from other Google Inc. shareholders, who feared the maneuver would unfairly benefit Page and Brin at the expense of just about everyone else.

Google proposed the unorthodox split so that Page and Brin could preserve power in the company they started in a rented garage more than 15 years ago. It addresses concerns that the founders would lose control of Google as the company creates more shares to compensate its employees and buy startups.

To gain clearance for the split, Google settled a shareholders lawsuit and agreed to pay anywhere from roughly $300 million to $7.5 billion if the split doesn’t pan out the way the Mountain View, Calif., company envisions.

Google’s split creates a new class of “C” stock that carries no voting power. One share of C stock will be distributed for each share of Google’s Class A stock, which provides its holders with a vote on corporate matters. Initially, the value of the current stock will be divided equally between the two types of shares. But they will then trade separately with different ticker symbols.

If the split hadn’t been delayed by a legal skirmish, Google’s stock probably wouldn’t have exceeded $1,000 for the first time last fall.

Page and Brin primarily own Google’s Class B stock, which already gives them 10 times the voting power of each Class A share. Combined, the Google founders control 56 percent of the shareholder votes, even though they own less than 15 percent of the outstanding stock.

Nonetheless, the voting clout of Page and Brin has been gradually shrinking, as Google has used Class A stock to reward employees and finance some of its acquisitions during the past decade.