Internet giant, Google has reported a lower than expected second quarter results as the company faced lower prices of ads and higher losses from its Motorola mobile phone business.
Investors expressed concerns over the falling prices of ad as they were expecting a change in Google's advertising system to help mitigate the impact of a move to the mobile advertising. An increasing number of users are now accessing Google services on their smartphone and tablets, where the advertising prices are much lower and this has affected profitability of the company.
Google had introduced some changes to its advertising system to remove the difference between ads destined for PCs and mobile ads and many believed that the move could help the company maintain revenue and profitability. However, the average price of Google's online ads fell about 6 percent during the second quarter of the year compared to the same quarter in the previous year.
Patrick Pichette, Google's finance chief said that the falling prices of ads might be due to a large number of international ads with lower rates and the shift to mobile. Shares of the company fell 4 percent to $872.80 in after-hours trading on Thursday after closing at $910.68 on the Nasdaq.
Source: Top News