Google disappoints with Q2 results

Despite posting higher sales and profits for the second quarter, Google has disappointed the market as a result of achieving lower prices for its online ads.

To compound matters, there were also widening losses at its Motorola mobile phone business ahead of a major handset launch.

Google had previously changed the way it charged for Internet ads by packaging together ads for desktops, tablets and mobile phones altogether, instead of charging for them separately.

But these changes do not seem to have worked into the results yet - with indications that advertisers are still keener on desktop ads rather than mobile ones, and Google not able to substantially boost its overall ad profits by packaging different format ads.

The average price of Google's online ads slid a larger-than-expected 6 per cent year-on-year in the second quarter, on top of the first quarter's 4 per cent decrease, so there is a worrying pattern developing there for investors.

Motorola, acquired by Google last year, made a second quarter loss of $218 million - more than four times the $49 million it lost a year earlier.

Google's total sales, including Motorola, were $14.11 billion (£9.28 billion) in the second quarter, against $11.81 billion (£7.76 billion) a year-ago. Analysts, on average, had expected total sales of $14.4 billion.

Net income rose to $3.23 billion (£2.12 billion) from $2.79 billion (£1.83 billion) last time.

Google's group second quarter results resulted in a post-announcement share slide yesterday.