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Google Expanding Offerings Through Acquisitions

Posted on Friday, Apr 18th 2014

eMarketer’s latest report on mobile advertising projects worldwide mobile internet ad spending to grow from $17.96 billion in 2013 to $94.91 billion by the year 2018. The mobile ad market is expected to grow 75% to $31.45 billion in 2014, but online giant Google  (NASDAQ: GOOGL) is seeing its market share slip. Last year, Google accounted for 49.3% of the mobile advertising market. That number is projected to drop to 46.8% in 2014 as Facebook ramps up its share from 17.5% to 21.7%.

Google is diversifying its efforts into revenues from alternate technology. Last week, they sold the wearable Google Glass to the public for a day and last quarter, they acquired connected device maker NestLabs as part of this move. During the recent quarter, Google continued to add to their portfolio through several acquisitions.

Google’s Financials
Google’s first quarter revenues grew 19% over the year to $15.42 billion, falling short of analyst expectations of $15.54 billion. EPS of $6.27 was hurt by their rising costs and fell short of the market’s projections of $6.38 for the quarter.

Revenues from Google’s sites grew 21% to $10.47 billion and revenues from partner sites grew 4% to $3.40 billion. Other revenues which include sales from services like Google Play and from devices like Chromecast grew 48% to $1.55 billion. Aggregate paid clicks grew 26% over the year while average cost per click fell 9% during the period in response to the increasing contribution of mobile advertising.

Google’s Acquisitions
Google continues to acquire companies in a move to diversify into emerging technologies and add talent. Earlier this month, they announced the acquisition of Titan Aerospace for an undisclosed sum. Start-up Titan Aerospace manufactures high-flying drones. Their drones fly on the edge of the earth’s atmosphere and help bring Internet connectivity to remote areas. Google plans to use Titan’s technology to integrate with their existing Project Loon. Project Loon is using balloons for remote Internet delivery, and thus expand their market reach. Recently, Google had proven how Loon balloons could be used to go across the globe in a short time. Analysts also believe that with the acquisition, Google will be able to improve their Maps offering by adding real time high definition images.

The market is also abuzz with rumors that Google is planning a Nexus TV. The rumors were fueled some more by the acquisition of certain assets of Green Throttle game company last month. Santa Clara-based Green Throttle is the manufacturer of an Android-based game system and controller. The acquisition is expected to help add talent and technology to Google’s team to build their own set-top box or a gaming console.

To help build their ad offerings, Google acquired Spider.io, a startup that helps identify and prevent ad fraud. Terms of the deal were not disclosed. The acquisition will help Google deal with online fraud and help ensure that their advertisers reach the targeted audience. Earlier this year, Google had also announced the acquisition of Israeli start-up SlickLogin that helps to keep passwords of a website more secure. SlickLogin’s innovative technology verifies a user’s identity and log in credentials by playing a uniquely generated sound through the computer’s speakers which is received by an app on the user’s smartphone. On the basis of the response from the phone, the server confirms access and allows the user to log in to the website.

Their stock is trading at $556.54 with a market capitalization of $374 billion.  It touched a high of $604.83 earlier this month after a two for one split.

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