SAN FRANCISCO — Google is still flexing its moneymaking muscle even as a technological upheaval nibbles at its dominance in Internet search and European antitrust regulators question some of the company’s practices.
Google’s first-quarter earnings were up 4 percent from last year, but its $13.9 billion revenue slumped well below analysts’ predictions.
Google’s first-quarter earnings rose 4 percent from last year to $3.6 billion as the company’s Internet-leading advertising network lifted revenue by 14 percent to $17.3 billion. After accounting adjustments, Google said it would have earned $6.57 per share, 4 cents below the estimates among analysts polled by FactSet. After subtracting ad commissions, revenue was $13.9 billion — about $100 million below analysts’ predictions.
It marked the sixth consecutive quarter that Google’s earnings have fallen below the analysts’ targets that shape investors’ expectations.
Investors, though, were encouraged by a healthy gain in the number of people looking at Google’s ads, even as the average prices for those marketing messages extended a 3½-year slump.
Besides releasing its latest report card this week, Google also settled up with shareholders for a stock split that created a class of shares with no voting power to keep CEO Larry Page and fellow co-founder Sergey Brin in control of the company. Google will pay $522 million in stock and cash to compensate stockholders for a pricing gap between the nonvoting Class C shares and Class A shares during their first year of trading.
General Motors
DETROIT — Encouraged by lower gas prices, consumers in the U.S. spent big in the first quarter on vehicles that carry lots of passengers and cargo — and deliver hefty profit margins for General Motors.
The shift to pickups and SUVs helped GM record a $2.18 billion first-quarter profit in North America, its most lucrative market, the company said this week. Tougher conditions in Europe, particularly Russia, and South America whittled GM’s overall quarterly net profit down to $945 million.
Late last decade, big SUVs such as the Chevrolet Tahoe fell out of favor as consumers consistently saw prices above $3 at the gas pump and the U.S. economy struggled. But the economy is now growing, if somewhat unevenly, and gas has averaged about $2.30 per gallon so far this year. As a result, consumers bought nearly 55,000 big SUVs from GM, the best January-through-March total in seven years.
Pickup sales also rose as conditions improved for small businesses. GM sold more than 198,000 in the U.S., the best first quarter for the vehicles in eight years, according to Ward’s Automotive.
NEW YORK — Nearly three-quarters of Facebook’s advertising revenue now comes from mobile ads, as many more users access the social network on smartphones and other hand-held gadgets.
On that front, the company is doing fine — better, even, than it has in previous quarters. But the rate of its overall revenue growth slowed in the first three months of this year, and this week’s earnings report marked the first time since early 2013 that Facebook failed to surpass Wall Street’s expectations.
Facebook has grown mobile ad revenue steadily since 2012, when it started showing ads for the devices’ smaller screens. In the previous quarter, mobile represented 69 percent of total advertising revenue. Facebook had 1.44 billion monthly active users as of March, up 13 percent from a year earlier. The number of users who accessed Facebook on mobile devices at least once a month grew 24 percent to 1.25 billion.
The company reported adjusted earnings of 42 cents per share in the January-March quarter, above the 41 cents per share that analysts polled by FactSet were expecting. Revenue increased 46 percent to $3.54 billion, from $2.5 billion a year earlier. Analysts had expected $3.56 billion.
Net income declined as Facebook’s expenses grew 83 percent from a year earlier. The company earned $512 million, or 18 cents per share, down 20 percent from $642 million, or 25 cents per share.
U.S. airlines
The combination of cheaper fuel and steady demand for flights within the U.S. is boosting all the major domestic airlines posting sharply higher earnings.
In earnings reports late this week:
» Southwest Airlines Co. said that first-quarter net income tripled from a year ago, to a record $453 million. The results were slightly better than Wall Street expected. The biggest reason was fuel. Southwest’s fuel bill dropped 33 percent, and the savings added up to $437 million — more than the entire increase in profit. Southwest is also stuffing more passengers on planes by holding growth below the increase in travel demand. Southwest increased passenger-carrying capacity by 6 percent, but people flew 7 percent more miles than they did a year earlier, so the average flight was 80.1 percent full, a record for the usually weak first quarter. Southwest said it earned 66 cents per share and the first quarter was the eighth straight quarter of record profit.
» American Airlines Group Inc. said that net income was $932 million, nearly double last year’s $480 million, the previous record for the quarter. The record profit, however, was less than the company’s $1.36 billion savings on fuel, compared with a year earlier. Revenue fell nearly 2 percent in the first quarter to $9.83 billion.
» United Continental Holdings Inc., parent company of United Airlines, said that first-quarter net income was a record $508 million, compared with a year-ago loss of $609 million. Revenue fell 1 percent to $8.61 billion, close to analysts’ forecast of $8.60 billion. CEO Jeff Smisek predicted another record profit in the April-through-June period on lower costs and higher margins.
Microsoft
SAN FRANCISCO — Microsoft is changing its business. The question is whether it’s changing fast enough.
The tech giant showed some progress this week, reporting better-than-expected quarterly earnings and more growth in its relatively new cloud computing segment. CEO Satya Nadella has been investing in new services and redesigning Microsoft’s most popular programs for smartphones and other mobile gadgets.
But a continuing slump in the PC industry has caused Microsoft’s stock to flounder. Microsoft’s latest report shows another decline in profit and revenue from the company’s Windows software for personal computers.
Wall Street analysts say 2015 is the year Nadella needs to show his strategy is making a difference.
He needs to not just talk the talk, but walk the walk, said FBR Capital Markets analyst Daniel Ives, who’s been a fan of Nadella’s moves to overhaul a company best known for its PC software. He called the quarterly report “a big step in the right direction.”
PepsiCo
NEW YORK — PepsiCo’s profit in the first quarter topped Wall Street expectations, boosted by the popularity of its Frito-Lay snacks and lower costs.
The global food-and-beverage maker said its snacks unit, which includes Lay’s and Doritos, saw volume climb 3 percent in North America, while pricing pushed up core revenue 4 percent.
Its beverage unit for the Americas, which includes Mountain Dew and Gatorade, saw volume decline 1 percent as pop sales struggled. But pricing drove up core revenue 2 percent.
Starbucks
NEW YORK — Starbucks is extracting more money from customers with offerings such as a “Flat White” espresso drink and revamped baked goods that cost a little more.
The company reported a higher quarterly profit Thursday, with sales jumping 7 percent at established U.S. stores. The company said much of the increase came from higher spending per visit.
New drinks help drive up sales because they’re a little pricier than other drinks, Starbucks Chief Financial Officer Scott Maw said. He noted the company is also charging more for baked goods like croissants, which are being made with new recipes.
Procter & Gamble
NEW YORK — Procter & Gamble took a hit from the strong dollar, like almost all U.S. companies with business overseas, pushing third-quarter revenue below expectations.
Because of the unfavorable currency environment, the company believes revenue for the year will slide to 6 percent from 5 percent.
Procter & Gamble Co., which makes everything from Gillette razors to Crest toothpaste, earned $2.15 billion, or 75 cents per share, for the period ended March 31. That compares with $2.61 billion, or 90 cents per share, last year. Adjusted earnings were 92 cents per share.
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