SAN FRANCISCO — There is no denying that Google has become a mobile company. Now, Google — along with shareholders, industry partners, and advertisers — is trying to figure out what that means.
In areas like mobile advertising, Google is wrestling with how to make as much money as it has on ads that appear on desktop computers. Its fourth-quarter earnings report Thursday showed that it is continuing to struggle with lower ad prices on phones.
In other areas, like manufacturing smartphones, Google has decided that the business is better left to someone else. On Wednesday, it announced it would sell Motorola Mobility to Lenovo for $2.91 billion, a decision that sent its stock price up 2.6 percent Thursday (Motorola lost $384 million in the quarter, weighing down results.)
Shareholders and equity analysts are also trying to figure out how to value Google as a mobile company.
Its stock price climbed 25 percent since its last quarterly earnings announcement in October, yet Google has performed below analysts’ expectations more often than not in the past two years and did so again in the fourth quarter, despite showing strong revenue and profit.
Shares rose $28.47 to $1,135.39 on the Nasdaq Stock Market Thursday.
The company reported fourth-quarter revenue of $16.86 billion, an increase of 17 percent over the year-ago quarter. Net revenue, which excludes payments to the company’s advertising partners, was $13.55 billion, up from $11.34 billion. Net income rose 17 percent to $3.38 billion, or $9.90 a share. Excluding the cost of stock options and the related tax benefits, Google’s profit was $12.01 a share, up from $10.65 a year ago.
Analysts had expected revenue of $16.75 billion and earnings, excluding the cost of stock options, of $12.26 a share. Google also reported that its board had approved a dividend.
“We ended 2013 with another great quarter of momentum and growth,” Larry Page, Google’s chief executive, said in a statement. “We made great progress across a wide range of product improvements and business goals.”
The fourth quarter is generally Google’s strongest because it makes money from retail advertisers during the holiday shopping season. Last quarter, that was even more pronounced because of the success of Google’s product listing ads, a new kind of ad with photos that Google requires retailers to buy in order to be included in its comparison shopping listings.
Yet despite Google’s challenges with mobile, among Web businesses it might be the biggest beneficiary so far of consumers’ shift to mobile devices. Google services are the top Web property on smartphones, reaching 87 percent of the mobile audience through apps and mobile browsing, according to comScore. (Facebook is next with 85 percent.) And Google earned 42 percent of all US mobile ad revenue last year, significantly more than any other company, according to eMarketer.
Analysts say Google has benefited from a brisk business in its Google Play store for buying things like apps and music on Android devices, and from widely distributing Google’s services on Android phones, which have 52 percent market share in the United States, according to comScore. On YouTube, 40 percent of time spent watching videos is on mobile devices, and in November, Google and Nielsen announced that Nielsen would measure its traffic the way it does on TV channels, which is expected to help YouTube court advertisers.
And despite the sale of Motorola, Google says it still wants to be a hardware company.
While everyone else is still obsessing about smartphones, Page has moved on to new kinds of devices — wearables, Internet-connected home appliances, and even robots.