Yahoo! Inc. (NASDAQ:YHOO) also made some solid gains in core search revenue, which grew by 5%. The growth in search revenues was offset by declining price-per-clicks. The falling cost of advertising is driven by the competitive environment, and changing business environment.
Yahoo! Inc. (NASDAQ:YHOO) did a great job of growing its net income in the most recent quarter. The company should be able to sustain higher rates of net income growth so as long as it continues to reduce the size of its research and development budget and reallocates that cash to acquisitions. Yahoo! Inc. (NASDAQ:YHOO) currently owns 24% of Alibaba as well, and its net income growth will further aid Yahoo!’s net income growth.
Analysts on a consensus basis anticipate Yahoo! to grow earnings by 15.6% in the 2014 fiscal year.
Facebook Inc (NASDAQ:FB) has been giving Yahoo! and Microsoft a bit of trouble when it comes to display-based advertising. After all, Facebook Inc (NASDAQ:FB) has important user data that allows advertisers to target their advertising and maximize advertising dollars. As a result, traditional banner advertising will experience a bit of difficulty on the pricing front.
Facebook Inc (NASDAQ:FB) has been able to monetize mobile by allowing companies to advertise on a users news feed. This may have a more favorable impact on the company’s earnings growth than what analysts are currently estimating. The company may also generate net income growth through cost cutting. Analysts currently estimate that Facebook will grow earnings by 29.63% per-year over the next five years.
Conclusion
Google Inc (NASDAQ:GOOG) has had a pretty tough quarter. It still has a lot to prove when it comes to Motorola. On the upside, the company was able to grow its app store sales by 138%. The company’s business strategy is a mixed bag: the software rocks, but the hardware stinks.
Yahoo! saw gains in profitability, which is something Google lacked. On the other hand, Google did great on the top line, which Yahoo! had a bit of trouble with. Microsoft did badly on both the top and bottom line, however this is likely to be temporary. Facebook, on the other hand should be able to grow net income by improving its profitability.
Given enough time, I think that the companies will be able to better adapt to smartphones, cloud computing, and tablets. In other words, I believe that there’s still long-term growth potential in Google Inc (NASDAQ:GOOG), Yahoo!, Facebook and Microsoft.
The article Google Has a Ton of Potential Despite a Miss on Earnings originally appeared on Fool.com and is written by Alexander Cho.
Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google and Microsoft. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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